Today I will take a look at Loral Space & Communications Inc’s (NASDAQ:LORL) most recent earnings update (30 September 2017) and compare these latest figures against its performance over the past few years, as well as how the rest of the media industry performed. As an investor, I find it beneficial to assess LORL’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. Check out our latest analysis for Loralce & Communications
How Well Did LORL Perform?
To account for any quarterly or half-yearly updates, 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 allows me to analyze different stocks on a more comparable basis, using new information. For Loralce & Communications, the most recent bottom-line is $81.6M, which, against the previous year’s level, has jumped up by 40.83%. Given that these figures are relatively nearsighted, I’ve computed an annualized five-year figure for Loralce & Communications’s earnings, which stands at $91.6M. This means that, even though earnings growth from last year was positive, over time, Loralce & Communications’s earnings have been declining on average.
Why could this be happening? Let’s examine what’s going on with margins and whether the rest of the industry is feeling the heat. In the past few years, Loralce & Communications has, on average, delivered negative top- and bottom-line growth. As revenues declined by more, expenses have been lowered in order to maintain margins – not the most sustainable operating activity. Looking at growth from a sector-level, the US media industry has been relatively flat in terms of earnings growth over the past few years. This suggests that any near-term headwind the industry is facing, the impact on Loralce & Communications has been softer relative to its peers.
What does this mean?
Though Loralce & Communications’s past data is helpful, it is only one aspect of my investment thesis. Recent positive growth isn’t always indicative of a continued optimistic outlook.
I recommend you continue to research Loralce & Communications to get a better picture of the stock by looking at:
1. Financial Health: Is LORL’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. Valuation: What is LORL worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether LORL is currently mispriced by the market.
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.