Examining Redfin Corporation’s (NASDAQ:RDFN) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess RDFN’s latest performance announced on 31 March 2018 and compare these figures to its longer term trend and industry movements. View out our latest analysis for Redfin
Was RDFN’s recent earnings decline worse than the long-term trend and the industry?RDFN is loss-making, with the most recent trailing twelve-month earnings of -US$174.52m (from 31 March 2018), which compared to last year has become more negative. Furthermore, the company’s loss seem to be growing over time, with the five-year earnings average of -US$168.38m. Each year, for the past five years RDFN has seen an annual increase in operating expense growth, outpacing revenue growth of 28.93%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Scanning growth from a sector-level, the US real estate industry has been growing its average earnings by double-digit 27.94% in the prior twelve months, and a less exciting 9.77% over the past half a decade. This means that whatever tailwind the industry is deriving benefit from, Redfin has not been able to reap as much as its average peer.
Although Redfin is loss-making, its has a good cash runway to meet its upcoming operating expense (should SG&A and one-year R&D remain constant at the current level of US$136.16m) over the next year. This is a strong indication of good cash management.
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 forecast what will occur going forward, and when. The most insightful step is to examine company-specific issues Redfin may be facing and whether management guidance has consistently been met in the past. I suggest you continue to research Redfin to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for RDFN’s future growth? Take a look at our free research report of analyst consensus for RDFN’s outlook.
- Financial Health: Is RDFN’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.
- 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.