With A -68.68% Earnings Drop, Is Intersections Inc’s (NASDAQ:INTX) A Concern?
Assessing Intersections Inc’s (NASDAQ:INTX) performance as a company requires looking at more than just a years’ earnings data. Below, I will run you through a simple sense check to build perspective on how Intersections is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its commercial services industry peers. See our latest analysis for Intersections
How Did INTX’s Recent Performance Stack Up Against Its Past?
I look at 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 method enables me to examine many different companies in a uniform manner using new information. For Intersections, its most recent earnings (trailing twelve month) is -US$5.76M, which, relative to the prior year’s figure, has become more negative. Since these figures are somewhat myopic, I have created an annualized five-year value for Intersections’s earnings, which stands at -US$6.11M. This means that, even though net income is negative, it has become less negative over the years.
We can further evaluate Intersections’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Intersections has seen an annual decline in revenue of -14.58%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Viewing growth from a sector-level, the US commercial services industry has been growing, albeit, at a subdued single-digit rate of 6.00% over the past year, and a substantial 11.14% over the last five years. This shows that whatever uplift the industry is profiting from, Intersections has not been able to leverage it as much as its industry peers.
What does this mean?
Though Intersections’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 examine company-specific issues Intersections may be facing and whether management guidance has consistently been met in the past. You should continue to research Intersections to get a more holistic view of the stock by looking at:
Financial Health: Is INTX’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.
Valuation: What is INTX 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 INTX is currently mispriced by the market.
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 March 2018. 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.
