Assessing XO Group Inc’s (NYSE:XOXO) past track record of performance is a valuable exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess XOXO’s recent performance announced on 31 December 2017 and evaluate these figures to its longer term trend and industry movements. Check out our latest analysis for XO Group
How Did XOXO’s Recent Performance Stack Up Against Its Past?
I like to use the ‘latest twelve-month’ data, 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 blend allows me to assess different stocks in a uniform manner using the most relevant data points. For XO Group, its most recent bottom-line (trailing twelve month) is US$5.53M, which compared to the prior year’s level, has taken a dive by a non-trivial -54.34%. Given that these values may be somewhat nearsighted, I have determined an annualized five-year figure for XO Group’s net income, which stands at US$6.25M This doesn’t look much better, since earnings seem to have consistently been declining over the longer term.
What could be happening here? Well, let’s look at what’s going on with margins and whether the entire industry is experiencing the hit as well. Revenue growth in the last few years, has been positive, however, earnings growth has fallen behind meaning XO Group has been increasing its expenses by a lot more. This hurts margins and earnings, and is not a sustainable practice. Viewing growth from a sector-level, the US internet industry has been growing its average earnings by double-digit 14.06% in the prior twelve months, and 17.62% over the previous five years. This means whatever tailwind the industry is enjoying, XO Group has not been able to realize the gains unlike its average peer.
What does this mean?
XO Group’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. In some cases, companies that experience a drawn out period of reduction in earnings are undergoing some sort of reinvestment phase in order to keep up with the latest industry disruption and growth. You should continue to research XO Group to get a more holistic view of the stock by looking at:
- 1. Future Outlook: What are well-informed industry analysts predicting for XOXO’s future growth? Take a look at our free research report of analyst consensus for XOXO’s outlook.
- 2. Financial Health: Is XOXO’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 31 December 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.