Want To Invest In Actua Corporation (FRA:IER1)? Here’s How It Performed Lately
After looking at Actua Corporation’s (DB:IER1) latest earnings update (31 December 2017), I found it helpful to revisit the company’s performance in the past couple of years and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is an important aspect. In this article I briefly touch on my key findings. Check out our latest analysis for Actua
Was IER1 weak performance lately part of a long-term decline?
I prefer to use data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This blend allows me to analyze different stocks in a uniform manner using the latest information. For Actua, its most recent earnings (trailing twelve month) is -US$22.33M, which, relative to the previous year’s level, has become more negative. Given that these values may be relatively myopic, I’ve created an annualized five-year figure for IER1’s net income, which stands at -US$20.56M. This doesn’t seem to paint a better picture, as earnings seem to have consistently been getting more and more negative over time.
We can further examine Actua’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Actua’s top-line has grown by a mere 5.29%, on average. The company’s inability to breakeven has been aided by the relatively flat top-line in the past. Viewing growth from a sector-level, the DE internet industry has been growing its average earnings by double-digit 14.80% over the prior twelve months, and 20.48% over the past five years. This means any uplift the industry is enjoying, Actua has not been able to gain as much as its industry peers.
What does this mean?
Though Actua’s past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always hard to predict what will happen in the future and when. The most valuable step is to examine company-specific issues Actua may be facing and whether management guidance has regularly been met in the past. You should continue to research Actua to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for IER1’s future growth? Take a look at our free research report of analyst consensus for IER1’s outlook.
Financial Health: Is IER1’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 31 December 2017. This may not be consistent with full year annual report figures.
To help readers see pass 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.
