In this article, I will take a look at Hövding Sverige AB (publ)’s (OM:HOVD) most recent earnings update (31 December 2017) and compare these latest figures against its performance over the past few years, along with how the rest of HOVD’s industry performed. As a long-term investor, I find it useful to analyze the company’s trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time. See our latest analysis for Hövding Sverige
Could HOVD beat the long-term trend and outperform its industry?
To account for any quarterly or half-yearly updates, I 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 enables me to assess different companies in a uniform manner using the latest information. For Hövding Sverige, its latest earnings (trailing twelve month) is -KR40.99M, which compared to last year’s level, has become less negative. Since these values may be fairly short-term thinking, I have determined an annualized five-year figure for HOVD’s net income, which stands at -KR35.20M. This shows that, Hövding Sverige has historically performed better than recently, although it seems like earnings are now heading back towards to right direction again.We can further analyze Hövding Sverige’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Hövding Sverige’s top-line has grown by 27.77% on average, implying that the company is in a high-growth phase with expenses racing ahead revenues, leading to annual losses. Scanning growth from a sector-level, the SE leisure industry has been relatively flat in terms of earnings growth in the prior year, settling down from a robust 14.95% over the last five years. This suggests that though Hövding Sverige is currently unprofitable, whatever recent headwind the industry is enduring, Hövding Sverige is relatively better-cushioned than its peers.
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 valuable step is to assess company-specific issues Hövding Sverige may be facing and whether management guidance has dependably been met in the past. I suggest you continue to research Hövding Sverige to get a better picture of the stock by looking at:
- 1. Financial Health: Is HOVD’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.