U.S. Markets closed

How Jackpot Digital Inc’s (CVE:JP) Earnings Growth Stacks Up Against The Industry

Collin Greene

Measuring Jackpot Digital Inc’s (TSXV:JP) track record of past performance is a useful exercise for investors. It enables us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess JP’s recent performance announced on 31 March 2018 and weigh these figures against its long-term trend and industry movements. See our latest analysis for Jackpot Digital

Did JP perform worse than its track record and industry?

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 blend enables me to analyze many different companies on a more comparable basis, using the most relevant data points. For Jackpot Digital, its most recent earnings (trailing twelve month) is -CA$5.83M, which compared to the prior year’s figure, has become more negative. Given that these values are somewhat myopic, I have calculated an annualized five-year figure for Jackpot Digital’s earnings, which stands at -CA$3.42M. This doesn’t seem to paint a better picture, as earnings seem to have consistently been getting more and more negative over time.

TSXV:JP Income Statement Jun 5th 18

We can further assess Jackpot Digital’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Jackpot Digital’s top-line has risen by 44.12% on average, signalling that the company is in a high-growth period with expenses racing ahead revenues, leading to annual losses. Viewing growth from a sector-level, the Canadian hospitality industry has been growing its average earnings by double-digit 13.68% over the past twelve months, and 19.62% over the previous five years. This means that any tailwind the industry is benefiting from, Jackpot Digital has not been able to reap as much as its industry peers.

What does this mean?

Though Jackpot Digital’s past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always hard to envisage what will happen in the future and when. The most useful step is to examine company-specific issues Jackpot Digital may be facing and whether management guidance has regularly been met in the past. I recommend you continue to research Jackpot Digital to get a better picture of the stock by looking at:

  1. Financial Health: Is JP’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 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.