With A -32.21% Earnings Drop, Is Delivery Hero AG’s (FRA:DHER) A Concern?
Measuring Delivery Hero AG’s (DB:DHER) track record of past performance is a useful exercise for investors. It enables us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess DHER’s recent performance announced on 30 June 2017 and weigh these figures against its long-term trend and industry movements. View our latest analysis for Delivery Hero
Was DHER weak performance lately part of a long-term decline?
For the most up-to-date info, I use the ‘latest twelve-month’ data, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This technique enables me to examine various companies on a more comparable basis, using the latest information. For Delivery Hero, its most recent earnings (trailing twelve month) is -€277.83M, which, relative to last year’s level, has become more negative. Since these values are relatively myopic, I have estimated an annualized five-year figure for DHER’s earnings, which stands at -€164.91M. This doesn’t look much better, since earnings seem to have consistently been getting more and more negative over time.
We can further evaluate Delivery Hero’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Delivery Hero’s top-line has increased by 46.45% on average, implying that the company is in a high-growth period with expenses shooting ahead of revenues, leading to annual losses. Scanning growth from a sector-level, the DE internet industry has been growing its average earnings by double-digit 16.21% over the previous year, and 20.25% over the past half a decade. This shows that any uplift the industry is benefiting from, Delivery Hero has not been able to realize the gains unlike its industry peers.
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 difficult to envisage what will occur going forward, and when. The most useful step is to assess company-specific issues Delivery Hero may be facing and whether management guidance has dependably been met in the past. I recommend you continue to research Delivery Hero to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for DHER’s future growth? Take a look at our free research report of analyst consensus for DHER’s outlook.
2. Financial Health: Is DHER’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 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.
