Where Amphion Innovations Plc (LON:AMP) Stands In Terms Of Earnings Growth Against Its Industry
After reading Amphion Innovations Plc’s (AIM:AMP) latest earnings update (30 June 2017), I found it beneficial to look back at how the company has performed in the past and compare this against the most recent numbers. As a long-term investor I tend to pay attention to earnings trend, rather than a single number at one point in time. I also like to compare against an industry benchmark to understand whether AMP has outperformed, or whether it is simply riding an industry wave. Below is a brief commentary on my key takeaways. View our latest analysis for Amphion Innovations
How AMP fared against its long-term earnings performance and its industry
I like 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 allows me to examine different stocks on a more comparable basis, using the latest information. For Amphion Innovations, its most recent bottom-line (trailing twelve month) is -$15.5M, which, relative to the prior year’s level, has become less negative. Since these values are somewhat short-term, I have calculated an annualized five-year figure for AMP’s net income, which stands at -$7.8M. This means Amphion Innovations has historically performed better than recently, despite the fact that it seems like earnings are now heading back towards to right direction again.
Additionally, we can evaluate Amphion Innovations’s loss by researching what’s going on in the industry as well as within the company. Initially, I want to quickly look into the line items. Revenue growth over the last few years has been negative at -46.82%. The key to profitability here is to make sure the company’s cost growth is well-managed. Eyeballing growth from a sector-level, the UK capital markets industry has been growing its average earnings by double-digit 22.59% in the past year, and 14.00% over the previous five years. This suggests that, despite the fact that Amphion Innovations is presently unprofitable, it may have benefited from industry tailwinds, moving earnings into a more favorable position.
What does this mean?
While past data is useful, it doesn’t tell the whole story. With companies that are currently loss-making, it is always hard to forecast what will happen in the future and when. The most useful step is to examine company-specific issues Amphion Innovations may be facing and whether management guidance has consistently been met in the past. I recommend you continue to research Amphion Innovations to get a more holistic view of the stock by looking at:
1. Financial Health: Is AMP’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.
2. Valuation: What is AMP worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether AMP is currently mispriced by the market.
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 trailing twelve months from 30 June 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.
