Did LightInTheBox Holding Co Ltd.’s (NYSE:LITB) 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 LightInTheBox Holding Co Ltd. (NYSE:LITB) useful as an attempt to give more color around how LightInTheBox Holding is currently performing. See our latest analysis for LightInTheBox Holding
Did LITB’s recent earnings growth beat the long-term trend and the industry?
For the most up-to-date info, 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 method enables me to examine different companies in a uniform manner using the most relevant data points. For LightInTheBox Holding, its latest trailing-twelve-month earnings is -US$8.43M, which, against the prior year’s level, has become less negative. Given that these values may be relatively short-term, I’ve determined an annualized five-year figure for LightInTheBox Holding’s earnings, which stands at -US$18.26M. This means that, even though net income is negative, it has become less negative over the years.
We can further evaluate LightInTheBox Holding’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years LightInTheBox Holding’s top-line has increased by a mere 9.86%, on average. The company’s inability to breakeven has been aided by the relatively flat top-line in the past. Looking at growth from a sector-level, the US online retail industry has been growing its average earnings by double-digit 44.43% over the previous year, and 16.00% over the past five years. This means any uplift the industry is enjoying, LightInTheBox Holding has not been able to leverage it as much as its average peer.
What does this mean?
Though LightInTheBox Holding’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always hard to predict what will happen in the future and when. The most insightful step is to examine company-specific issues LightInTheBox Holding may be facing and whether management guidance has consistently been met in the past. You should continue to research LightInTheBox Holding to get a more holistic view of the stock by looking at:
1. Financial Health: Is LITB’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.
