InnSuites Hospitality Trust (NYSEMKT:IHT): Does -30.8% EPS Drop In A Year Reflect The Long-Term Trend?

In this commentary, I will examine InnSuites Hospitality Trust’s (AMEX:IHT) latest earnings update (31 July 2017) and compare these figures against its performance over the past couple of years, as well as how the rest of the hospitality industry performed. As an investor, I find it beneficial to assess IHT’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time. View our latest analysis for InnSuites Hospitality Trust

Was IHT’s recent earnings decline indicative of a tough track record?

I prefer 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 blend enables me to analyze various companies on a more comparable basis, using the most relevant data points. For InnSuites Hospitality Trust, the most recent twelve-month earnings -$2.7M, which, against the prior year’s level, has become more negative. Since these values may be relatively short-term, I have created an annualized five-year figure for InnSuites Hospitality Trust’s net income, which stands at -$1.6M. This doesn’t seem to paint a better picture, since earnings seem to have gradually been getting more and more negative over time.

AMEX:IHT Income Statement Dec 15th 17
AMEX:IHT Income Statement Dec 15th 17
Additionally, we can assess InnSuites Hospitality Trust’s loss by researching what’s going on in the industry as well as within the company. Initially, I want to briefly look into the line items. Revenue growth over the past few years has been negative at -6.50%. The key to profitability here is to make sure the company’s cost growth is well-controlled. Looking at growth from a sector-level, the US hospitality industry has been growing its average earnings by double-digit 13.82% in the previous twelve months, and 11.05% over the past couple of years. This shows that any uplift the industry is benefiting from, InnSuites Hospitality Trust has not been able to realize the gains unlike its average peer.

What does this mean?

InnSuites Hospitality Trust’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. With companies that are currently loss-making, it is always difficult to forecast what will happen in the future and when. The most valuable step is to examine company-specific issues InnSuites Hospitality Trust may be facing and whether management guidance has regularly been met in the past. You should continue to research InnSuites Hospitality Trust to get a better picture of the stock by looking at:

1. Financial Health: Is IHT’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 last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.