Interested In ADTRAN Inc (NASDAQ:ADTN)? Here’s How It Performed Recently
In this commentary, I will examine ADTRAN Inc’s (NASDAQ:ADTN) latest earnings update (31 December 2017) and compare these figures against its performance over the past couple of years, as well as how the rest of the communications industry performed. As an investor, I find it beneficial to assess ADTN’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. View our latest analysis for ADTRAN
Was ADTN weak performance lately part of a long-term decline?
I look at 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 allows me to examine different companies on a similar basis, using the most relevant data points. For ADTRAN, its latest trailing-twelve-month earnings is US$23.84M, which, against last year’s figure, has fallen by a substantial -32.33%. Given that these values may be somewhat short-term thinking, I have computed an annualized five-year value for ADTRAN’s net income, which stands at US$54.62M This doesn’t look much better, since earnings seem to have consistently been deteriorating over time.
What could be happening here? Well, let’s take a look at what’s occurring with margins and whether the whole industry is experiencing the hit as well. Although revenue growth in the past couple of years, has been negative, earnings growth has been declining by even more, meaning ADTRAN has been ramping up its expenses. This hurts margins and earnings, and is not a sustainable practice. Eyeballing growth from a sector-level, the US communications industry has been growing its average earnings by double-digit 30.95% in the previous twelve months, and a more subdued 9.36% over the last five years. This means whatever tailwind the industry is deriving benefit from, ADTRAN has not been able to realize the gains unlike its average peer.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Usually companies that experience a prolonged period of decline in earnings are undergoing some sort of reinvestment phase in order to keep up with the recent industry expansion and disruption. I recommend you continue to research ADTRAN to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for ADTN’s future growth? Take a look at our free research report of analyst consensus for ADTN’s outlook.
Financial Health: Is ADTN’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 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.
