Was Eastside Distilling Inc’s (NASDAQ:EAST) Earnings Decline A Part Of Broader Industry Downturn?
For investors with a long-term horizon, examining earnings trend over time and against industry peers is more insightful than looking at an earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on Eastside Distilling Inc (NASDAQ:EAST) useful as an attempt to give more color around how Eastside Distilling is currently performing. View our latest analysis for Eastside Distilling
Was EAST’s recent earnings decline indicative of a tough track record?
I prefer to 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 blend allows me to examine many different companies on a similar basis, using the most relevant data points. For Eastside Distilling, its most recent trailing-twelve-month earnings is -$5.1M, which, relative to the prior year’s figure, has become more negative. Given that these figures are fairly myopic, I have created an annualized five-year value for EAST’s net income, which stands at -$3.9M. This doesn’t seem to paint a better picture, as earnings seem to have steadily been getting more and more negative over time.
We can further analyze Eastside Distilling’s loss by researching what’s going on in the industry as well as within the company. Initially, I want to briefly look into the line items. Revenue growth over the past couple of years has increased by 30.92%, signalling that Eastside Distilling is in a high-growth period with expenses racing ahead elevated top-line growth rates, leading to yearly losses. Scanning growth from a sector-level, the US beverage industry has been growing its average earnings by double-digit 18.99% in the past year, and a less exciting 3.09% over the past five. This means that any tailwind the industry is deriving benefit from, Eastside Distilling has not been able to realize the gains unlike its industry peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that incur net loss is always hard to envisage what will occur going forward, and when. The most useful step is to assess company-specific issues Eastside Distilling may be facing and whether management guidance has consistently been met in the past. I suggest you continue to research Eastside Distilling to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for EAST’s future growth? Take a look at our free research report of analyst consensus for EAST’s outlook.
2. Financial Health: Is EAST’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.
