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Was Naked Brand Group Inc’s (NASDAQ:NAKD) Earnings Growth Better Than The Industry’s?

James Harlett

For long term investors, improvement in profitability and outperformance against the industry can be important characteristics in a stock. In this article, I will take a look at Naked Brand Group Inc’s (NASDAQ:NAKD) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers. Check out our latest analysis for Naked Brand Group

Did NAKD’s recent earnings growth beat the long-term trend and the industry?

To account for any quarterly or half-yearly updates, 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 examine different companies on a similar basis, using the latest information. For Naked Brand Group, its most recent trailing-twelve-month earnings is -US$8.31M, which compared to the prior year’s level, has become less negative. Since these figures may be relatively short-term thinking, I’ve estimated an annualized five-year value for NAKD’s net income, which stands at -US$10.09M. This means that, even though net income is negative, it has become less negative over the years.

NasdaqCM:NAKD Income Statement Mar 2nd 18
NasdaqCM:NAKD Income Statement Mar 2nd 18

We can further examine Naked Brand Group’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Naked Brand Group’s top-line has risen by 34.30% on average, indicating that the company is in a high-growth phase with expenses racing ahead revenues, leading to annual losses. Viewing growth from a sector-level, the US luxury industry has been growing, albeit, at a unexciting single-digit rate of 3.04% over the prior year, and 4.85% over the last five years. This means even though Naked Brand Group is currently running a loss, any near-term headwind the industry is enduring, the impact on Naked Brand Group has been softer relative to its peers.

What does this mean?

While past data is useful, it doesn’t tell the whole story. With companies that are currently loss-making, it is always difficult to predict what will occur going forward, and when. The most valuable step is to assess company-specific issues Naked Brand Group may be facing and whether management guidance has consistently been met in the past. I suggest you continue to research Naked Brand Group to get a more holistic view of the stock by looking at the areas below. Just a heads up – to access some parts of the Simply Wall St research tool you might be asked to create a free account, but it takes just one click and the information they provide is definitely worth it in my opinion.

  • 1. Financial Health: Is NAKD’s operations financially sustainable? Balance sheets can be hard to analyze, which is why Simply Wall St does it for you. Check out important financial health checks here.

  • 2. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore a free list of these great stocks here.

NB: Figures in this article are calculated using data from the trailing twelve months from 31 October 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.