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After reading Applied Graphene Materials plc's ( LON:AGM ) most recent earnings announcement (31 January 2019), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether Applied Graphene Materials's performance has been impacted by industry movements. In this article I briefly touch on my key findings.
Despite a decline, did AGM underperform the long-term trend and the industry?
AGM is loss-making, with the most recent trailing twelve-month earnings of -UK£3.4m (from 31 January 2019), which compared to last year has become more negative. Furthermore, the company's loss seem to be growing over time, with the five-year earnings average of -UK£3.1m. Each year, for the past five years AGM has seen an annual increase in operating expense growth, outpacing revenue growth of 31%, on average. This adverse movement is a driver of the company's inability to reach breakeven.
Inspecting growth from a sector-level, the UK chemicals industry has been relatively flat in terms of earnings growth
Even though Applied Graphene Materials is currently unprofitable, it has a sufficient cash cushion (UK£8.2m) to pay for its upcoming operating expenses over the next year. This is a sign of good cash management.
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 predict what will occur going forward, and when. The most valuable step is to examine company-specific issues Applied Graphene Materials may be facing and whether management guidance has dependably been met in the past. You should continue to research Applied Graphene Materials to get a more holistic view of the stock by looking at:
- Financial Health : Are AGM’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 January 2019. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org . This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.