After reading Hudson Global Inc’s (NASDAQ:HSON) most recent earnings announcement (31 December 2017), 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 tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways. View our latest analysis for Hudson Global
Were HSON’s earnings stronger than its past performances and the industry?
I look at the ‘latest twelve-month’ data, 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 assess many different companies on a more comparable basis, using new information. For Hudson Global, its latest earnings (trailing twelve month) is -US$2.92M, which, relative to the prior year’s figure, has become less negative. Given that these values may be relatively short-term thinking, I have estimated an annualized five-year figure for HSON’s net income, which stands at -US$7.30M. This shows that, despite the fact that net income is negative, it has become less negative over the years.We can further analyze Hudson Global’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Hudson Global has seen an annual decline in revenue of -13.69%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Viewing growth from a sector-level, the US professional services industry has been growing its average earnings by double-digit 17.05% over the previous twelve months, and 10.65% over the past five. This means that, though Hudson Global is presently running a loss, it may have benefited from industry tailwinds, 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 hard to predict what will occur going forward, and when. The most insightful step is to assess company-specific issues Hudson Global may be facing and whether management guidance has steadily been met in the past. You should continue to research Hudson Global to get a better picture of the stock by looking at:
- Financial Health: Is HSON’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 HSON 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 HSON 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.