Today I will examine One Horizon Group Inc’s (NASDAQ:OHGI) latest earnings update (30 September 2017) and compare these figures against its performance over the past couple of years, in addition to how the rest of OHGI’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 One Horizon Group
Was OHGI weak performance lately part of a long-term decline?
I like to 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 allows me to examine many different companies in a uniform manner using new information. For One Horizon Group, its most recent twelve-month earnings is -$4.8M, which compared to the previous year’s level, has become more negative. Given that these figures are somewhat nearsighted, I have calculated an annualized five-year figure for OHGI’s earnings, which stands at -$2.6M. This doesn’t look much better, since earnings seem to have gradually been getting more and more negative over time.
We can further assess One Horizon Group’s loss by looking at what’s going on in the industry as well as within the company. Firstly, I want to briefly look into the line items. Revenue growth over the past few years has been negative at -28.60%. The key to profitability here is to make sure the company’s cost growth is well-managed. Eyeballing growth from a sector-level, the US internet industry has been growing, albeit, at a muted single-digit rate of 7.42% in the prior year, and a substantial 15.52% over the previous few years. This shows that whatever uplift the industry is deriving benefit from, One Horizon Group has not been able to leverage it as much as its industry peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that incur net loss is always hard to envisage what will happen in the future and when. The most useful step is to examine company-specific issues One Horizon Group may be facing and whether management guidance has steadily been met in the past. You should continue to research One Horizon Group to get a better picture of the stock by looking at:
1. Financial Health: Is OHGI’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.