How Has Singulus Technologies AG’s (FRA:SNG) Performed Against The Industry?
When Singulus Technologies AG (FRA:SNG) released its most recent earnings update (30 June 2018), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well Singulus Technologies has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I’ve summarized the key takeaways on how I see SNG has performed.
See our latest analysis for Singulus Technologies
Have SNG’s earnings improved against past performances and the industry?
SNG is loss-making, with the most recent trailing twelve-month earnings of -€7.3m (from 30 June 2018), which compared to last year has become more negative. However, the company’s loss seem to be contracting over the medium term, with the five-year earnings average of -€19.7m. Each year, for the past five years SNG has seen an annual decline in revenue of -7.7%, on average. This adverse movement is a driver of the company’s inability to reach breakeven.
Scanning growth from a sector-level, the DE machinery industry has been growing, albeit, at a muted single-digit rate of 3.6% over the past year, and a substantial 12% over the past five. This growth is a median of profitable companies of 25 Machinery companies in DE including Diskus Werke, STS Group and Heidelberger Druckmaschinen. This means whatever recent headwind the industry is facing, it’s hitting Singulus Technologies harder than its peers.
Given that Singulus Technologies is not profitable, even if operating expenses (SG&A and one-year R&D) continues to fall at previous year’s rate of -7.1%, the company’s current cash level (€25m) will still be insufficient to cover its expenses in the upcoming year. This is not a great sign in terms of operations and cash management. Even though this is analysis is fairly basic, and Singulus Technologies still can cut its overhead further, or raise debt capital instead of coming to equity markets, the outcome of this analysis still helps us understand how sustainable the Singulus Technologies’s operation is, and when things may have to change.
What does this mean?
Though Singulus Technologies’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always difficult to predict what will occur going forward, and when. The most valuable step is to assess company-specific issues Singulus Technologies may be facing and whether management guidance has regularly been met in the past. I recommend you continue to research Singulus Technologies to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for SNG’s future growth? Take a look at our free research report of analyst consensus for SNG’s outlook.
Financial Health: Are SNG’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 June 2018. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
