For investors with a long-term horizon, assessing earnings trend over time and against industry benchmarks is more valuable than looking at a single earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on Centric Holdings SA. (ATSE:CENTR) useful as an attempt to give more color around how Centric Holdings is currently performing. View our latest analysis for Centric Holdings
Did CENTR beat its long-term earnings growth trend and its industry?
I 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 allows me to analyze different companies on a more comparable basis, using the most relevant data points. For Centric Holdings, its latest trailing-twelve-month earnings is -€1.47M, which compared to the previous year’s figure, has become less negative. Given that these figures are relatively myopic, I have determined an annualized five-year figure for Centric Holdings’s net income, which stands at -€2.67M. This suggests that, although net income is negative, it has become less negative over the years.
We can further examine Centric Holdings’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Centric Holdings’s top-line has increased by 14.85% on average, indicating that the company is in a high-growth period with expenses racing ahead revenues, leading to annual losses. Eyeballing growth from a sector-level, the GR hospitality industry has been growing its average earnings by double-digit 13.73% in the prior year, . This is a change from a volatile drop of -17.41% in the past couple of years. This means that, though Centric Holdings is currently running a loss, it may have only just been aided by the recent industry expansion, moving earnings in the right direction.
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 envisage what will happen in the future and when. The most useful step is to assess company-specific issues Centric Holdings may be facing and whether management guidance has steadily been met in the past. I recommend you continue to research Centric Holdings to get a better picture of the stock by looking at:
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Financial Health: Is CENTR’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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Valuation: What is CENTR 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 CENTR is currently mispriced by the market.
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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 30 June 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.