Assessing FlexShopper Inc’s (NASDAQ:FPAY) 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 FlexShopper is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its diversified financial industry peers. Check out our latest analysis for FlexShopper
Were FPAY’s earnings stronger than its past performances and the industry?
For the purpose of this commentary, I like to use the ‘latest twelve-month’ data, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This technique allows me to assess different stocks on a similar basis, using the most relevant data points. For FlexShopper, its latest earnings (trailing twelve month) is -US$10.65M, which compared to the previous year’s level, has become less negative. Since these values may be relatively myopic, I’ve estimated an annualized five-year value for FlexShopper’s net income, which stands at -US$4.78M. This means that, FlexShopper has historically performed better than recently, even though it seems like earnings are now heading back in the right direction again.We can further evaluate FlexShopper’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years FlexShopper’s top-line has grown by 55.17% on average, implying that the company is in a high-growth period with expenses racing ahead revenues, leading to annual losses. Viewing growth from a sector-level, the US diversified financial industry has been growing its average earnings by double-digit 21.28% in the past year, and 13.63% over the past five. This means whatever uplift the industry is benefiting from, FlexShopper has not been able to leverage it as much as its average peer.
What does this mean?
FlexShopper’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 difficult to predict what will occur going forward, and when. The most insightful step is to examine company-specific issues FlexShopper may be facing and whether management guidance has consistently been met in the past. I recommend you continue to research FlexShopper to get a more holistic view of the stock by looking at:
- 1. Financial Health: Is FPAY’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. Valuation: What is FPAY 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 FPAY is currently mispriced by the market.
- 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.