Yahoo Finance Does Tesserent Limited’s (ASX:TNT) Past Performance Indicate A Weaker Future?
After looking at Tesserent Limited’s (ASX:TNT) latest earnings update (31 December 2017), I found it helpful to revisit the company’s performance in the past couple of years and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is an important aspect. In this article I briefly touch on my key findings. View our latest analysis for Tesserent
Commentary On TNT’s Past Performance
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 enables me to assess different companies on a similar basis, using the latest information. For Tesserent, its latest earnings (trailing twelve month) is -AU$3.28M, which, against the previous year’s figure, has become more negative. Since these figures may be fairly nearsighted, I have computed an annualized five-year figure for TNT’s earnings, which stands at -AU$1.16M. This doesn’t look much better, as earnings seem to have consistently been getting more and more negative over time.
We can further evaluate Tesserent’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Tesserent’s top-line has increased by 14.03% on average, indicating that the company is in a high-growth period with expenses shooting ahead of revenues, leading to annual losses. Eyeballing growth from a sector-level, the Australian software industry has been growing its average earnings by double-digit 13.93% over the prior twelve months, and 15.93% over the last five years. This means whatever uplift the industry is deriving benefit from, Tesserent has not been able to reap as much as its industry peers.
What does this mean?
Tesserent’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that incur net loss is always difficult to predict what will occur going forward, and when. The most insightful step is to examine company-specific issues Tesserent may be facing and whether management guidance has steadily been met in the past. You should continue to research Tesserent to get a more holistic view of the stock by looking at:
Financial Health: Is TNT’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 TNT 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 TNT 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 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.
