In This Article:
Understanding Tabcorp Holdings Limited’s (ASX:TAH) performance as a company requires examining more than earnings from one point in time. Today I will take you through a basic sense check to gain perspective on how Tabcorp Holdings is doing by evaluating its latest earnings with its longer term trend as well as its industry peers’ performance over the same period. View our latest analysis for Tabcorp Holdings
How Well Did TAH Perform?
I prefer to use data from the most recent 12 months, 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 enables me to assess various companies on a similar basis, using the most relevant data points. For Tabcorp Holdings, its latest earnings (trailing twelve month) is -AU$55.10M, which, against the previous year’s level, has turned from positive to negative. Since these values may be somewhat short-term thinking, I have determined an annualized five-year value for TAH’s earnings, which stands at AU$120.37M.
We can further examine Tabcorp Holdings’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Tabcorp Holdings’s revenue growth has been fairly muted, with an annual growth rate of -0.46%, on average. The company’s inability to breakeven has been aided by the relatively flat top-line in the past. Eyeballing growth from a sector-level, the Australian hospitality industry has been relatively flat in terms of earnings growth in the prior year, evening out from a solid 16.99% over the last five years. This means any recent headwind the industry is enduring, it’s hitting Tabcorp Holdings harder than its peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that incur net loss is always difficult to forecast what will occur going forward, and when. The most valuable step is to assess company-specific issues Tabcorp Holdings may be facing and whether management guidance has regularly been met in the past. I recommend you continue to research Tabcorp Holdings to get a more holistic view of the stock by looking at:
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1. Future Outlook: What are well-informed industry analysts predicting for TAH’s future growth? Take a look at our free research report of analyst consensus for TAH’s outlook.
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2. Financial Health: Is TAH’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.
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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.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.