Cornerstone OnDemand Inc (NASDAQ:CSOD): Should The Recent EPS Drop Worry You?
Measuring Cornerstone OnDemand Inc’s (NASDAQ:CSOD) 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 CSOD’s recent performance announced on 30 September 2017 and weigh these figures against its long-term trend and industry movements. View our latest analysis for Cornerstone OnDemand
Was CSOD’s recent earnings decline worse than the long-term trend and the industry?
To account for any quarterly or half-yearly updates, 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 assess different stocks on a similar basis, using the latest information. Cornerstone OnDemand’s latest earnings -$70.9M, which, against the previous year’s figure, has become more negative. Since these figures are fairly short-term thinking, I’ve estimated an annualized five-year value for CSOD’s net income, which stands at -$61.2M. This doesn’t look much better, since earnings seem to have steadily been getting more and more negative over time.
We can further evaluate Cornerstone OnDemand’s loss by researching what has been happening in the industry on top of within the company. Initially, I want to briefly look into the line items. Revenue growth over the past few years has risen by 29.43%, signalling that Cornerstone OnDemand is in a high-growth phase with expenses shooting ahead of high top-line growth rates. Viewing growth from a sector-level, the US internet industry has been growing, albeit, at a muted single-digit rate of 7.42% over the past twelve months, and a substantial 15.52% over the past couple of years. This means any tailwind the industry is profiting from, Cornerstone OnDemand has not been able to realize the gains unlike its industry peers.
What does this mean?
Cornerstone OnDemand’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that incur net loss is always hard to forecast what will happen in the future and when. The most useful step is to examine company-specific issues Cornerstone OnDemand may be facing and whether management guidance has consistently been met in the past. You should continue to research Cornerstone OnDemand to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for CSOD’s future growth? Take a look at our free research report of analyst consensus for CSOD’s outlook.
2. Financial Health: Is CSOD’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 last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. 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.
