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Does New Media Investment Group Inc’s (NYSE:NEWM) -117.47% Earnings Decline Reflect A Long-Term Trend?

For investors with a long-term horizon, assessing earnings trend over time and against industry benchmarks is more valuable than looking at a single earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on New Media Investment Group Inc (NYSE:NEWM) useful as an attempt to give more color around how New Media Investment Group is currently performing. See our latest analysis for New Media Investment Group

Was NEWM’s weak performance lately a part of a long-term decline?

I 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 technique enables me to examine many different companies on a more comparable basis, using new information. For New Media Investment Group, its most recent trailing-twelve-month earnings is -US$12.85M, which, in comparison to the previous year’s figure, has turned from positive to negative. Given that these values may be somewhat short-term, I have estimated an annualized five-year value for New Media Investment Group’s earnings, which stands at US$122.44M.

NYSE:NEWM Income Statement Feb 28th 18
NYSE:NEWM Income Statement Feb 28th 18

We can further examine New Media Investment Group’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years New Media Investment Group’s top-line has increased by 19.24% on average, signalling that the company is in a high-growth period with expenses shooting ahead of revenues, leading to annual losses. Scanning growth from a sector-level, the US media industry has been growing its average earnings by double-digit 11.05% over the prior year, and a less exciting 7.00% over the previous five years. This means that whatever tailwind the industry is enjoying, New Media Investment Group has not been able to leverage it as much as its average peer.

What does this mean?

New Media Investment Group’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. With companies that are currently loss-making, it is always difficult to predict what will occur going forward, and when. The most valuable step is to examine company-specific issues New Media Investment Group may be facing and whether management guidance has regularly been met in the past. You should continue to research New Media Investment Group to get a better picture of the stock by looking at the areas below. Just a heads up – to access some parts of the Simply Wall St research tool you might be asked to create a free account, but it takes just one click and the information they provide is definitely worth it in my opinion.

  • 1. Future Outlook: What are well-informed industry analysts predicting for NEWM’s future growth? Take a look at this free research report of analyst consensus for NEWM’s outlook.

  • 2. Financial Health: Is NEWM’s operations financially sustainable? Balance sheets can be hard to analyze, which is why Simply Wall St does it for you. Check out important financial health checks here.

  • 3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore a free list of these great stocks here.

NB: Figures in this article are calculated using data from the trailing twelve months from 24 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.

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