Does Twitter Inc's (NYSE:TWTR) Latest Financial Perfomance Look Strong?

In this article, I will take a look at Twitter Inc's (NYSE:TWTR) most recent earnings update (31 December 2017) and compare these latest figures against its performance over the past few years, along with how the rest of TWTR's industry performed. As a long-term investor, I find it useful to analyze the company's trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time. Check out our latest analysis for Twitter

How TWTR fared against its long-term earnings performance and its industry

To account for any quarterly or half-yearly updates, I use 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 technique allows me to analyze different stocks in a uniform manner using new information. For Twitter, its most recent trailing-twelve-month earnings is -US$108.06M, which compared to the prior year's figure, has become less negative. Since these values may be fairly short-term thinking, I have determined an annualized five-year figure for TWTR's net income, which stands at -US$440.52M. This means that, despite the fact that net income is negative, it has become less negative over the years.

We can further evaluate Twitter's loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Twitter's top-line has grown by 32.67% on average, indicating that the company is in a high-growth phase with expenses racing ahead revenues, leading to annual losses. Looking at growth from a sector-level, the US internet industry has been growing its average earnings by double-digit 14.06% in the past twelve months, and 17.62% over the past five. This means although Twitter is currently running a loss, it may have benefited from industry tailwinds, moving earnings into a more favorable position.

What does this mean?

Though Twitter's past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always difficult to envisage what will happen in the future and when. The most useful step is to assess company-specific issues Twitter may be facing and whether management guidance has dependably been met in the past. I suggest you continue to research Twitter to get a more holistic view of the stock by looking at:

• 1. Future Outlook: What are well-informed industry analysts predicting for TWTR’s future growth? Take a look at our free research report of analyst consensus for TWTR’s outlook.
• 2. Financial Health: Is TWTR’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 December 2017. This may not be consistent with full year annual report figures.

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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.