Did American Renal Associates Holdings Inc’s (NYSE:ARA) Earnings Growth Outperform The Industry?
For investors with a long-term horizon, assessing earnings trend over time and against industry benchmarks is more valuable than looking at a single earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on American Renal Associates Holdings Inc (NYSE:ARA) useful as an attempt to give more color around how American Renal Associates Holdings is currently performing. See our latest analysis for American Renal Associates Holdings
Were ARA’s earnings stronger than its past performances and the industry?
I like to use data from the most recent 12 months, 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 allows me to examine many different companies in a uniform manner using new information. For American Renal Associates Holdings, its latest earnings (trailing twelve month) is -US$7.42M, which, against last year’s figure, has become less negative. Given that these figures are fairly short-term thinking, I’ve determined an annualized five-year figure for American Renal Associates Holdings’s earnings, which stands at US$2.51M.
We can further analyze American Renal Associates Holdings’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade American Renal Associates Holdings’s top-line has increased by 12.91% on average, implying that the company is in a high-growth period with expenses racing ahead revenues, leading to annual losses. Looking at growth from a sector-level, the US healthcare industry has been growing its average earnings by double-digit 10.14% over the previous twelve months, and 10.22% over the past five years. This means whatever tailwind the industry is deriving benefit from, American Renal Associates Holdings 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 incur net loss is always difficult to forecast what will happen in the future and when. The most useful step is to examine company-specific issues American Renal Associates Holdings may be facing and whether management guidance has regularly been met in the past. I recommend you continue to research American Renal Associates Holdings to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for ARA’s future growth? Take a look at our free research report of analyst consensus for ARA’s outlook.
2. Financial Health: Is ARA’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 December 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.
