American Outdoor Brands Corporation (NASDAQ:AOBC): Does -54.58% Earnings Drop In A Year Reflect The Long-Term Trend?
Investors with a long-term horizong may find it valuable to assess American Outdoor Brands Corporation’s (NASDAQ:AOBC) earnings trend over time and against its industry benchmark as opposed to simply looking at a sincle earnings announcement at one point in time. Below is my commentary, albiet very simple and high-level, on how American Outdoor Brands is currently performing. Check out our latest analysis for American Outdoor Brands
How Well Did AOBC Perform?
I look at 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 method enables me to analyze many different companies on a similar basis, using the most relevant data points. For American Outdoor Brands, its most recent bottom-line (trailing twelve month) is US$61.22M, which, against last year’s level, has plunged by a substantial -54.58%. Given that these figures may be somewhat short-term, I have determined an annualized five-year figure for American Outdoor Brands’s net income, which stands at US$68.96M This doesn’t look much better, since earnings seem to have steadily been falling over time.
Why could this be happening? Well, let’s look at what’s transpiring with margins and if the entire industry is facing the same headwind. Over the past couple of years, revenue growth has been lagging behind which implies that American Outdoor Brands’s bottom line has been propelled by unmaintainable cost-cutting. Scanning growth from a sector-level, the US leisure industry has been enduring some headwinds in the prior year, leading to an average earnings drop of -8.58%. This is a major change, given that the industry has constantly been delivering a a robust growth of 15.53% in the previous five years. This suggests that any near-term headwind the industry is experiencing, it’s hitting American Outdoor Brands harder than its peers.
What does this mean?
Though American Outdoor Brands’s past data is helpful, it is only one aspect of my investment thesis. In some cases, companies that endure an extended period of diminishing earnings are undergoing some sort of reinvestment phase Although, if the entire industry is struggling to grow over time, it may be a sign of a structural shift, which makes American Outdoor Brands and its peers a riskier investment. I suggest you continue to research American Outdoor Brands to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for AOBC’s future growth? Take a look at our free research report of analyst consensus for AOBC’s outlook.
2. Financial Health: Is AOBC’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 31 October 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.
