When NII Holdings Inc (NASDAQ:NIHD) announced its most recent earnings (31 December 2017), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well NII Holdings has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I’ve summarized the key takeaways on how I see NIHD has performed. View our latest analysis for NII Holdings
Did NIHD’s recent earnings growth beat the long-term trend and the industry?
I like to use data from the most recent 12 months, 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 examine different companies in a uniform manner using the latest information. For NII Holdings, its most recent trailing-twelve-month earnings is -US$302.02M, which compared to the prior year’s figure, has become less negative. Given that these values may be relatively short-term thinking, I have determined an annualized five-year figure for NII Holdings’s net income, which stands at -US$488.33M. This means that, while net income is negative, it has become less negative over the years.We can further analyze NII Holdings’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years NII Holdings has seen an annual decline in revenue of -33.72%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Scanning growth from a sector-level, the US wireless telcom industry has been growing, albeit, at a muted single-digit rate of 5.09% in the previous year, . This is a turnaround from a volatile drop of -3.21% in the past few years. This means that, despite the fact that NII Holdings is presently running a loss, it may have only just benefited from the recent industry expansion, moving earnings towards to right direction.
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 difficult to envisage what will occur going forward, and when. The most useful step is to examine company-specific issues NII Holdings may be facing and whether management guidance has dependably been met in the past. You should continue to research NII Holdings to get a better picture of the stock by looking at:
- Financial Health: Is NIHD’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.