In this commentary, I will examine ChinaNet Online Holdings Inc’s (NASDAQ:CNET) latest earnings update (30 September 2017) and compare these figures against its performance over the past couple of years, as well as how the rest of the media industry performed. As an investor, I find it beneficial to assess CNET’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time. View our latest analysis for ChinaNet Online Holdings
Did CNET’s recent EPS Growth beat the long-term trend and the industry?
For the most up-to-date info, I use 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 allows me to assess various companies on a similar basis, using the latest information. ChinaNet Online Holdings’s most recent bottom-line -$6.3M, which, relative to the previous year’s figure, has become less negative. Given that these figures are somewhat nearsighted, I have estimated an annualized five-year figure for ChinaNet Online Holdings’s earnings, which stands at -$1.8M. This suggests that, ChinaNet Online Holdings has historically performed better than recently, while it seems like earnings are now heading back towards to right direction again.
Additionally, we can examine ChinaNet Online Holdings’s loss by looking at what’s going on in the industry on top of within the company. First, I want to briefly look into the line items. Revenue growth over the last few years has been relatively soft, remaining flat on average at -0.95%. Given that top-line growth is also pretty flat, the key to profitability moving forward would be managing cost growth rates. Inspecting growth from a sector-level, the US media industry has been relatively flat in terms of earnings growth over the previous few years. This means any recent headwind the industry is experiencing, ChinaNet Online Holdings is relatively better-cushioned than its peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. With companies that are currently loss-making, it is always hard to envisage what will occur going forward, and when. The most useful step is to assess company-specific issues ChinaNet Online Holdings may be facing and whether management guidance has regularly been met in the past. I suggest you continue to research ChinaNet Online Holdings to get a better picture of the stock by looking at:
1. Financial Health: Is CNET’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 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.