HSN Inc (NASDAQ:HSNI): Does -15.66% Earnings Drop In A Year Reflect The Long-Term Trend?
After looking at HSN Inc’s (NASDAQ:HSNI) latest earnings announcement (30 September 2017), I found it useful to revisit the company’s performance in the past couple of years and assess this against the most recent figures. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether HSN’s performance has been impacted by industry movements. In this article I briefly touch on my key findings. Check out our latest analysis for HSN
Did HSNI perform worse than its track record and industry?
I prefer to 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 enables me to examine different stocks on a more comparable basis, using new information. For HSN, its most recent bottom-line (trailing twelve month) is US$113.77M, which, in comparison to the previous year’s level, has plunged by -15.66%. Since these figures are fairly nearsighted, I’ve created an annualized five-year value for HSNI’s earnings, which stands at US$145.85M This doesn’t look much better, as earnings seem to have consistently been declining over time.
Why is this? Well, let’s take a look at what’s transpiring with margins and whether the rest of the industry is experiencing the hit as well. Revenue growth in the past couple of years, has been positive, however, earnings growth has fallen behind meaning HSN has been growing its expenses by a lot more. This hurts margins and earnings, and is not a sustainable practice. Inspecting growth from a sector-level, the US online retail industry has been growing its average earnings by double-digit 33.00% in the prior twelve months, and a more subdued 8.72% over the past five. This means that any tailwind the industry is benefiting from, HSN has not been able to gain as much as its average peer.
What does this mean?
HSN’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Usually companies that experience an extended period of decline in earnings are going through some sort of reinvestment phase in order to keep up with the latest industry disruption and expansion. I suggest you continue to research HSN to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for HSNI’s future growth? Take a look at our free research report of analyst consensus for HSNI’s outlook.
2. Financial Health: Is HSNI’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.
