Investors with a long-term horizong may find it valuable to assess NII Holdings Inc’s (NASDAQ:NIHD) earnings trend over time and against its industry benchmark as opposed to simply looking at a sincle earnings announcement at one point in time. Below is my commentary, albiet very simple and high-level, on how NII Holdings is currently performing. Check out our latest analysis for NII Holdings
How Did NIHD’s Recent Performance Stack Up Against Its Past?
I look at the ‘latest twelve-month’ data, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This technique enables me to examine various companies in a uniform manner using the latest information. For NII Holdings, its latest trailing-twelve-month earnings is -US$302.00M, which, relative to last year’s figure, has become less negative. Given that these figures may be relatively nearsighted, I have estimated an annualized five-year value for NII Holdings’s net income, which stands at -US$457.03M. This means although net income is negative, it has become less negative over the years.
We can further analyze NII 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 NII Holdings has seen an annual decline in revenue of -31.77%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Viewing growth from a sector-level, the US wireless telcom industry has been growing, albeit, at a muted single-digit rate of 2.93% in the prior year, . This is a change from a volatile drop of -3.82% in the past few years. This means although NII Holdings is currently unprofitable, whatever recent headwind the industry is enduring, the impact on NII Holdings has been softer relative to its peers.
What does this mean?
Though NII Holdings’s past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always difficult to envisage what will happen in the future and when. The most useful step is to assess company-specific issues NII Holdings may be facing and whether management guidance has consistently been met in the past. I suggest you continue to research NII Holdings to get a better picture of the stock by looking at:
- 1. Financial Health: Is NIHD’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 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.