How Does Internap Corporation’s (NASDAQ:INAP) Earnings Growth Stack Up Against Industry Performance?
Understanding how Internap Corporation (NASDAQ:INAP) is performing as a company requires looking at more than just a years’ earnings. Today I will run you through a basic sense check to gain perspective on how Internap is doing by comparing its latest earnings with its long-term trend as well as the performance of its internet industry peers. See our latest analysis for Internap
Could INAP beat the long-term trend and outperform its industry?
I prefer 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 technique enables me to assess various companies in a uniform manner using the most relevant data points. For Internap, its latest earnings (trailing twelve month) is -$51.5M, which, against the prior year’s level, has become less negative. Since these values may be relatively short-term, I have estimated an annualized five-year figure for Internap’s earnings, which stands at -$38.3M. This means Internap has historically performed better than recently, although it seems like earnings are now heading back in the right direction again.
Additionally, we can evaluate Internap’s loss by researching what has been happening in the industry as well as within the company. Firstly, I want to quickly look into the line items. Revenue growth over the last couple of years has increased by a mere 3.77%. Since top-line growth is also pretty flat, the key to profitability moving forward would be managing cost growth rates. Scanning growth from a sector-level, the US internet industry has been growing, albeit, at a subdued single-digit rate of 7.42% in the previous year, and a substantial 15.52% over the previous five years. This suggests that, though Internap is currently loss-making, it may have gained from industry tailwinds, moving earnings in the right direction.
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 valuable step is to examine company-specific issues Internap may be facing and whether management guidance has steadily been met in the past. I suggest you continue to research Internap to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for INAP’s future growth? Take a look at our free research report of analyst consensus for INAP’s outlook.
2. Financial Health: Is INAP’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 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.
