Network18 Media & Investments Limited (NSE:NETWORK18): Does The -52.44% Earnings Decline Make It An Underperformer?

Understanding Network18 Media & Investments Limited's (NSEI:NETWORK18) 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 Network18 Media & Investments 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 Network18 Media & Investments

Was NETWORK18's recent earnings decline worse than 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 allows me to analyze various companies on a more comparable basis, using new information. For Network18 Media & Investments, its most recent trailing-twelve-month earnings is -₹2,346.4M, which, in comparison to last year’s level, has become more negative. Given that these figures are somewhat nearsighted, I’ve calculated an annualized five-year figure for NETWORK18's earnings, which stands at -₹2,967.9M. This means that, although net income is negative, it has become less negative over the years.

Additionally, we can evaluate Network18 Media & Investments's loss by researching what’s going on in the industry as well as within the company. Initially, I want to quickly look into the line items. Revenue growth over the last couple of years has grown by a mere 4.84%. Since top-line growth is also pretty flat, the key to profitability moving forward would be managing cost growth rates. Scanning growth from a sector-level, the IN media industry has been growing, albeit, at a muted single-digit rate of 4.42% over the previous year, and a substantial 14.27% over the past five years. This means that whatever recent headwind the industry is facing, it’s hitting Network18 Media & Investments harder than its peers.

What does this mean?

Network18 Media & Investments'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 hard to forecast what will occur going forward, and when. The most valuable step is to examine company-specific issues Network18 Media & Investments may be facing and whether management guidance has consistently been met in the past. I suggest you continue to research Network18 Media & Investments to get a better picture of the stock by looking at:

1. Financial Health: Is NETWORK18’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.

2. 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 30 September 2017. This may not be consistent with full year annual report figures.

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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.