Understanding HRL Holdings Limited’s (ASX:HRL) performance as a company requires examining more than earnings from one point in time. Today I will take you through a basic sense check to gain perspective on how HRL Holdings is doing by evaluating its latest earnings with its longer term trend as well as its industry peers’ performance over the same period. View our latest analysis for HRL Holdings
How HRL fared against its long-term earnings performance and its industry
I use data from the most recent 12 months, 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 analyze different stocks in a uniform manner using the latest information. For HRL Holdings, its latest earnings (trailing twelve month) is -AU$17.28K, which compared to the previous year’s figure, has become less negative. Given that these figures are fairly nearsighted, I’ve determined an annualized five-year value for HRL Holdings’s earnings, which stands at -AU$91.50K. This means that, though net income is negative, it has become less negative over the years.We can further examine HRL Holdings’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years HRL Holdings’s top-line has risen by 44.83% on average, implying that the company is in a high-growth period with expenses shooting ahead of revenues, leading to annual losses. Viewing growth from a sector-level, the Australian commercial services industry has been growing its average earnings by double-digit 26.00% in the previous year, and a more muted 8.09% over the past half a decade. This means that, even though HRL Holdings is currently unprofitable, it may have gained from industry tailwinds, 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 insightful step is to examine company-specific issues HRL Holdings may be facing and whether management guidance has steadily been met in the past. I suggest you continue to research HRL Holdings to get a more holistic view of the stock by looking at:
- Financial Health: Is HRL’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 HRL 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 HRL 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.