For investors with a long-term horizon, examining earnings trend over time and against industry peers is more insightful than looking at an earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on Euroinvestment SA. (WSE:VIV) useful as an attempt to give more color around how Euroinvestment is currently performing. View our latest analysis for Euroinvestment
Did VIV beat its long-term earnings growth trend and its industry?
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 technique enables me to examine different companies on a similar basis, using new information. For Euroinvestment, its most recent earnings (trailing twelve month) is -ZŁ675.63K, which compared to the prior year’s figure, has become less negative. Given that these values are fairly nearsighted, I have computed an annualized five-year figure for VIV’s net income, which stands at -ZŁ3.80M. This suggests that, even though net income is negative, it has become less negative over the years.
We can further analyze Euroinvestment’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Euroinvestment has seen an annual decline in revenue of -36.78%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Viewing growth from a sector-level, the PL media industry has been enduring some headwinds over the previous twelve months, leading to an average earnings drop of -3.27%. This is a significant change, given that the industry has constantly been delivering a a robust growth of 17.18% in the last five years. This means that even though Euroinvestment is currently loss-making, any near-term headwind the industry is facing, the impact on Euroinvestment has been softer relative to its peers.
What does this mean?
Euroinvestment’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. With companies that are currently loss-making, it is always difficult to predict what will occur going forward, and when. The most valuable step is to examine company-specific issues Euroinvestment may be facing and whether management guidance has dependably been met in the past. I recommend you continue to research Euroinvestment to get a more holistic view of the stock by looking at:
- Financial Health: Is VIV’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.
- Valuation: What is VIV 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 VIV is currently mispriced by the market.
- 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 2016. 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.