Increase in profitability and industry-beating performance can be essential considerations in a stock for some investors. In this article, I will take a look at Nvoi Limited’s (ASX:NVO) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers. See our latest analysis for Nvoi
How Well Did NVO Perform?
I use the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This method allows me to analyze different stocks on a more comparable basis, using new information. For Nvoi, its most recent earnings (trailing twelve month) is -AU$4.10M, which, against last year’s level, has become less negative. Since these values are fairly short-term, I have created an annualized five-year figure for NVO’s net income, which stands at -AU$4.19M. This means that, even though net income is negative, it has become less negative over the years.
We can further examine Nvoi’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Nvoi’s top-line more than doubled on average, implying that the business is in a high-growth period with expenses shooting ahead of revenues, leading to annual losses. Inspecting growth from a sector-level, the Australian internet industry has been growing its average earnings by double-digit 30.11% over the previous year, and 20.81% over the past five. This suggests that, despite the fact that Nvoi is currently unprofitable, it may have benefited from industry tailwinds, moving earnings in the right direction.
What does this mean?
Though Nvoi’s past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always difficult to forecast what will occur going forward, and when. The most insightful step is to assess company-specific issues Nvoi may be facing and whether management guidance has dependably been met in the past. I recommend you continue to research Nvoi to get a better picture of the stock by looking at:
- Financial Health: Is NVO’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.