Does Staffing 360 Solutions Inc’s (NASDAQ:STAF) Past Performance Indicate A Weaker Future?

Assessing Staffing 360 Solutions Inc’s (NASDAQ:STAF) performance as a company requires looking at more than just a years’ earnings data. Below, I will run you through a simple sense check to build perspective on how Staffing 360 Solutions is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its professional services industry peers. See our latest analysis for Staffing 360 Solutions

How Did STAF’s Recent Performance Stack Up Against Its Past?

STAF is loss-making, with the most recent trailing twelve-month earnings of -US$18.01m (from 31 March 2018), which compared to last year has become more negative. However, the company’s loss seem to be contracting over the medium term, with the five-year earnings average of -US$9.21m. Each year, for the past five years STAF has seen an annual increase in operating expense growth, outpacing revenue growth of 40.23%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Inspecting growth from a sector-level, the US professional services industry has been growing its average earnings by double-digit 17.05% over the prior twelve months, and 10.91% over the past five years. This means that whatever uplift the industry is profiting from, Staffing 360 Solutions has not been able to realize the gains unlike its average peer.
NasdaqCM:STAF Income Statement June 15th 18
NasdaqCM:STAF Income Statement June 15th 18

Since Staffing 360 Solutions is currently unprofitable, with operating expenses (opex) growing year-on-year at 25.00%, it may need to raise more cash over the next year. It currently has US$3.46m in cash and short-term investments, however, opex (SG&A and one-year R&D) reached US$36.42m in the latest twelve months. Even though this is analysis is fairly basic, and Staffing 360 Solutions still can cut its overhead in the near future, or raise debt capital instead of coming to equity markets, the analysis still helps us understand how sustainable the Staffing 360 Solutions’s operation is, and when things may have to change.

What does this mean?

Though Staffing 360 Solutions’s past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always difficult to forecast what will happen in the future and when. The most useful step is to examine company-specific issues Staffing 360 Solutions may be facing and whether management guidance has dependably been met in the past. I recommend you continue to research Staffing 360 Solutions to get a more holistic view of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for STAF’s future growth? Take a look at our free research report of analyst consensus for STAF’s outlook.
  2. Financial Health: Is STAF’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.
  3. 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 31 March 2018. This may not be consistent with full year annual report figures.