Was DLH Holdings Corp’s (NASDAQ:DLHC) Earnings Decline A Part Of Broader Industry Downturn?
Measuring DLH Holdings Corp’s (NASDAQ:DLHC) track record of past performance is a valuable exercise for investors. It allows 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 DLHC’s recent performance announced on 30 September 2017 and compare these figures to its historical trend and industry movements. See our latest analysis for DLH Holdings
Despite a decline, did DLHC underperform the long-term trend and the industry?
For the purpose of this commentary, I like to use the ‘latest twelve-month’ data, 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 examine many different companies on a similar basis, using the latest information. “For DLH Holdings, its “, latest twelve-month earnings is $3.3M, which, in comparison to the prior year’s figure, has plunged by -2.84%. Since these figures may be relatively nearsighted, I have computed an annualized five-year figure for DLH Holdings’s net income, which stands at $1.7M. This shows that despite the fact that earnings growth was negative against the prior year, over the long run, DLH Holdings’s profits have been increasing on average.
What’s the driver of this growth? Well, let’s take a look at if it is merely a result of an industry uplift, or if DLH Holdings has experienced some company-specific growth. Over the past couple of years, DLH Holdings increased its bottom line faster than revenue by successfully controlling its costs. This brought about a margin expansion and profitability over time. Inspecting growth from a sector-level, the US professional services industry has been growing its average earnings by double-digit 10.06% over the prior year, and a more subdued 9.29% over the previous few years. This means that whatever uplift the industry is benefiting from, DLH Holdings has not been able to realize the gains unlike its industry peers.
What does this mean?
Though DLH Holdings’s past data is helpful, it is only one aspect of my investment thesis. Companies are profitable, but have unpredictable earnings, can have many factors impacting its business. I suggest you continue to research DLH Holdings to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for DLHC’s future growth? Take a look at our free research report of analyst consensus for DLHC’s outlook.
2. Financial Health: Is DLHC’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.
