For long-term investors, assessing earnings trend over time and against industry benchmarks is more beneficial than examining a single earnings announcement at a point in time. Investors may find my commentary, albeit very high-level and brief, on Veritone Inc (NASDAQ:VERI) useful as an attempt to give more color around how Veritone is currently performing. See our latest analysis for VERI
Was VERI’s weak performance lately a part of a long-term decline?
To account for any quarterly or half-yearly updates, I use the ‘latest twelve-month’ data, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This blend allows me to analyze various companies on a more comparable basis, using the most relevant data points. Veritone’s most recent twelve-month earnings -$61M, which compared to last year’s figure, has become more negative. Given that these figures are fairly nearsighted, I’ve computed an annualized five-year value for VERI’s earnings, which stands at -$27M. This doesn’t look much better, as earnings seem to have steadily been getting more and more negative over time.
Additionally, we can evaluate Veritone’s loss by researching what’s going on in the industry along with within the company. Initially, I want to quickly look into the line items. Revenue growth over last few years has grown by a mere 6.75%. Since top-line growth is also pretty flat, the key to profitability in the future would be managing cost growth rates. Looking at growth from a sector-level, the US internet software and services industry has been growing its average earnings by double-digit 18.01% over the prior twelve months, and 22.48% over the past five. This means any uplift the industry is enjoying, Veritone has not been able to gain as much as its industry peers.
What does this mean?
Though Veritone’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always hard to envisage what will happen in the future and when. The most insightful step is to assess company-specific issues Veritone may be facing and whether management guidance has dependably been met in the past. You should continue to research Veritone to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for VERI’s future growth? Take a look at our free research report of analyst consensus for VERI’s outlook.
2. Financial Health: Is VERI’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.
3. 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 last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. 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.