When iFresh Inc (NASDAQ:IFMK) released its most recent earnings update (30 September 2017), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were iFresh’s average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not IFMK actually performed well. Below is a quick commentary on how I see IFMK has performed. See our latest analysis for iFresh
Commentary On IFMK’s Past Performance
I like 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 method allows me to analyze different stocks on a more comparable basis, using the most relevant data points. For iFresh, its most recent bottom-line (trailing twelve month) is US$870.97K, which, in comparison to the prior year’s level, has plunged by a large -64.23%. Given that these values are relatively myopic, I have computed an annualized five-year figure for IFMK’s earnings, which stands at US$1.92M This doesn’t look much better, as earnings seem to have steadily been diminishing over the longer term.
Why is this? Well, let’s take a look at what’s occurring with margins and whether the whole industry is facing the same headwind. Revenue growth over the last couple of years, has been positive, yet earnings growth has been declining. This means iFresh has been ramping up expenses, which is hurting margins and earnings, and is not a sustainable practice. Eyeballing growth from a sector-level, the US consumer retailing industry has been growing, albeit, at a subdued single-digit rate of 8.51% in the previous twelve months, and 4.41% over the previous five years. This shows that whatever tailwind the industry is profiting from, iFresh has not been able to leverage it as much as its average peer.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Typically companies that endure a prolonged period of decline in earnings are undergoing some sort of reinvestment phase with the aim of keeping up with the recent industry expansion and disruption. You should continue to research iFresh to get a better picture of the stock by looking at:
- 1. Financial Health: Is IFMK’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.
- 2. 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.