Should You Be Concerned About Chanticleer Holdings Inc’s (NASDAQ:BURG) -61.92% Earnings Decline?
Today I will take a look at Chanticleer Holdings Inc’s (NASDAQ:BURG) most recent earnings update (30 September 2017) and compare these latest figures against its performance over the past few years, as well as how the rest of the hospitality industry performed. As an investor, I find it beneficial to assess BURG’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 Chanticleer Holdings
Was BURG’s recent earnings decline worse than the long-term trend and the industry?
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 blend enables me to assess many different companies on a similar basis, using the latest information. For Chanticleer Holdings, its most recent earnings (trailing twelve month) is -$6.7M, which, against the prior year’s level, has become more negative. Since these values may be relatively short-term thinking, I’ve determined an annualized five-year value for Chanticleer Holdings’s net income, which stands at -$4.4M. This doesn’t look much better, as earnings seem to have consistently been getting more and more negative over time.
We can further examine Chanticleer Holdings’s loss by researching what has been happening in the industry as well as within the company. First, I want to briefly look into the line items. Revenue growth over the past few years has increased by 39.07%, indicating that Chanticleer Holdings is in a high-growth period with expenses shooting ahead of high top-line growth rates, leading to yearly losses. Looking at growth from a sector-level, the US hospitality industry has been growing its average earnings by double-digit 13.57% over the previous twelve months, and 11.39% over the past five. This shows that whatever uplift the industry is deriving benefit from, Chanticleer Holdings has not been able to reap as much as its average peer.
What does this mean?
Though Chanticleer Holdings’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 insightful step is to examine company-specific issues Chanticleer Holdings may be facing and whether management guidance has regularly been met in the past. I recommend you continue to research Chanticleer Holdings to get a better picture of the stock by looking at:
1. Financial Health: Is BURG’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 30 September 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.
