In this commentary, I will examine Bridgford Foods Corporation’s (NASDAQ:BRID) latest earnings update (26 January 2018) and compare these figures against its performance over the past couple of years, as well as how the rest of the food industry performed. As an investor, I find it beneficial to assess BRID’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time. View our latest analysis for Bridgford Foods
Was BRID’s recent earnings decline worse than the long-term trend and the 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 allows me to examine many different companies on a more comparable basis, using the latest information. For Bridgford Foods, its most recent earnings (trailing twelve month) is US$4.73M, which, against last year’s level, has dropped by a large -43.44%. Given that these values are relatively myopic, I’ve determined an annualized five-year value for Bridgford Foods’s net income, which stands at US$4.54M This suggests that though earnings declined from the previous year, over a longer period of time, Bridgford Foods’s earnings have been growing on average.
What’s the driver of this growth? Well, let’s take a look at if it is solely attributable to an industry uplift, or if Bridgford Foods has experienced some company-specific growth. Over the last few years, Bridgford Foods expanded its bottom line faster than revenue by effectively controlling its costs. This has led to a margin expansion and profitability over time. Scanning growth from a sector-level, the US food industry has been growing its average earnings by double-digit 10.50% over the previous year, and a less exciting 6.95% over the last five years. This suggests that whatever uplift the industry is enjoying, Bridgford Foods has not been able to realize the gains unlike its average peer.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that are profitable, but have capricious earnings, can have many factors impacting its business. I suggest you continue to research Bridgford Foods to get a better picture of the stock by looking at:
- 1. Financial Health: Is BRID’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.
- 2. 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 26 January 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.