HUYA Inc’s (NYSE:HUYA) Earnings Dropped -11.87%, Did Its Industry Show Weakness Too?
In this commentary, I will examine HUYA Inc’s (NYSE:HUYA) latest earnings update (31 March 2018) and compare these figures against its performance over the past couple of years, as well as how the rest of the internet industry performed. As an investor, I find it beneficial to assess HUYA’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time. See our latest analysis for HUYA
Did HUYA perform worse than its track record and industry?
To account for any quarterly or half-yearly updates, I use data from the most recent 12 months, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This method enables me to analyze different stocks on a more comparable basis, using new information. For HUYA, its most recent trailing-twelve-month earnings is -CN¥555.30M, which, against the prior year’s figure, has become more negative. Given that these figures are fairly short-term, I’ve computed an annualized five-year figure for HUYA’s earnings, which stands at -CN¥378.82M. This doesn’t look much better, since earnings seem to have gradually been getting more and more negative over time.
We can further analyze HUYA’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years HUYA’s top-line has risen by 78.30% on average, indicating that the company is in a high-growth period with expenses shooting ahead of revenues, leading to annual losses. Looking at growth from a sector-level, the US internet industry has been growing its average earnings by double-digit 22.15% over the prior year, and 18.27% over the past five years. This shows that whatever tailwind the industry is deriving benefit from, HUYA has not been able to gain as much as its average peer.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that incur net loss is always difficult to predict what will occur going forward, and when. The most insightful step is to examine company-specific issues HUYA may be facing and whether management guidance has consistently been met in the past. I suggest you continue to research HUYA to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for HUYA’s future growth? Take a look at our free research report of analyst consensus for HUYA’s outlook.
Financial Health: Is HUYA’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.
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 March 2018. 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.
