After reading Hudson Global Inc’s (NASDAQ:HSON) latest earnings update (31 December 2017), I found it beneficial to look back at how the company has performed in the past and compare this against the most recent numbers. As a long-term investor I tend to pay attention to earnings trend, rather than a single number at one point in time. I also like to compare against an industry benchmark to understand whether HSON has outperformed, or whether it is simply riding an industry wave. Below is a brief commentary on my key takeaways. View our latest analysis for Hudson Global
Could HSON beat the long-term trend and outperform its industry?
For the most up-to-date info, I use data from the most recent 12 months, 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 method allows me to assess many different companies in a uniform manner using new information. For Hudson Global, its most recent trailing-twelve-month earnings is -US$2.92M, which, against last year’s level, has become less negative. Given that these figures are somewhat nearsighted, I have estimated an annualized five-year value for Hudson Global’s net income, which stands at -US$7.30M. This means that, though net income is negative, it has become less negative over the years.
We can further assess Hudson Global’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Hudson Global has seen an annual decline in revenue of -13.69%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Scanning growth from a sector-level, the US professional services industry has been growing its average earnings by double-digit 17.05% in the past twelve months, and 10.65% over the past half a decade. This means though Hudson Global is presently running a loss, it may have been aided by industry tailwinds, moving earnings in the right direction.
What does this mean?
Though Hudson Global’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always hard to envisage what will occur going forward, and when. The most insightful step is to assess company-specific issues Hudson Global may be facing and whether management guidance has consistently been met in the past. I recommend you continue to research Hudson Global to get a more holistic view of the stock by looking at:
- Financial Health: Is HSON’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.
- Valuation: What is HSON 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 HSON is currently mispriced by the market.
- 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.