Yahoo Finance Should You Be Content With Strat Aero Plc’s (LON:AERO) Earnings Growth?
When Strat Aero Plc (AIM:AERO) announced its most recent earnings (31 December 2017), I did two things: looked at its past earnings track record, then look at what is happening in the industry. Understanding how Strat Aero performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see AERO has performed. See our latest analysis for Strat Aero
Commentary On AERO’s Past Performance
I look at 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 assess many different companies in a uniform manner using the most relevant data points. For Strat Aero, its latest earnings (trailing twelve month) is -US$2.51M, which, in comparison to last year’s level, has become less negative. Given that these figures may be relatively nearsighted, I’ve created an annualized five-year value for AERO’s earnings, which stands at -US$4.06M. This shows that, although net income is negative, it has become less negative over the years.
We can further assess Strat Aero’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Strat Aero’s top-line has increased by a mere 4.06%, on average. The company’s inability to breakeven has been aided by the relatively flat top-line in the past. Scanning growth from a sector-level, the UK aerospace & defense industry has been growing its average earnings by double-digit 19.68% in the past twelve months, . This is a turnaround from a volatile drop of -4.01% in the previous couple of years. This suggests that, despite the fact that Strat Aero is presently unprofitable, it may have only just gained from the recent industry expansion, moving earnings into a more favorable position.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that incur net loss is always hard to predict what will occur going forward, and when. The most useful step is to examine company-specific issues Strat Aero may be facing and whether management guidance has steadily been met in the past. I suggest you continue to research Strat Aero to get a more holistic view of the stock by looking at:
Financial Health: Is AERO’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.
