Advertisement
U.S. markets open in 1 hour 47 minutes
  • S&P Futures

    5,303.25
    -5.00 (-0.09%)
     
  • Dow Futures

    40,119.00
    -25.00 (-0.06%)
     
  • Nasdaq Futures

    18,481.00
    -22.75 (-0.12%)
     
  • Russell 2000 Futures

    2,139.10
    +0.70 (+0.03%)
     
  • Crude Oil

    82.53
    +1.18 (+1.45%)
     
  • Gold

    2,232.20
    +19.50 (+0.88%)
     
  • Silver

    24.68
    -0.07 (-0.27%)
     
  • EUR/USD

    1.0792
    -0.0037 (-0.35%)
     
  • 10-Yr Bond

    4.1960
    0.0000 (0.00%)
     
  • Vix

    12.98
    +0.20 (+1.56%)
     
  • dólar/libra

    1.2620
    -0.0018 (-0.14%)
     
  • USD/JPY

    151.3760
    +0.1300 (+0.09%)
     
  • Bitcoin USD

    70,559.34
    +318.05 (+0.45%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • FTSE 100

    7,952.37
    +20.39 (+0.26%)
     
  • Nikkei 225

    40,168.07
    -594.66 (-1.46%)
     

Patriot Transportation Holding Inc (PATI): Should The Recent EPS Drop Worry You?

When Patriot Transportation Holding Inc (NASDAQ:PATI) released its most recent earnings update (30 June 2017), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well Patriot Transportation Holding has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I’ve summarized the key takeaways on how I see PATI has performed. Check out our latest analysis for Patriot Transportation Holding

Was PATI’s recent earnings decline indicative of a tough track record?

I prefer to 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 allows me to analyze different stocks on a similar basis, using new information. Patriot Transportation Holding’s latest twelve-month earnings is $4M, which, against the prior year’s figure, has dropped by -28.57%. Since these figures are relatively short-term, I have estimated an annualized five-year figure for Patriot Transportation Holding’s earnings, which stands at $4M. This doesn’t look much better, since earnings seem to have consistently been falling over the longer term.

NasdaqGS:PATI Income Statement Nov 22nd 17
NasdaqGS:PATI Income Statement Nov 22nd 17

Why could this be happening? Well, let’s look at what’s going on with margins and if the whole industry is experiencing the hit as well. Revenue growth over the last few years, has been positive, however, earnings growth has not been able to catch up, meaning Patriot Transportation Holding has been ramping up its expenses by a lot more. This harms margins and earnings, and is not a sustainable practice. Scanning growth from a sector-level, the US road and rail industry has been enduring some headwinds in the past year, leading to an average earnings drop of -11.30%. This is a momentous change, given that the industry has constantly been delivering a a solid growth of 10.06% in the past five years. This means whatever near-term headwind the industry is enduring, it’s hitting Patriot Transportation Holding harder than its peers.

What does this mean?

Though Patriot Transportation Holding’s past data is helpful, it is only one aspect of my investment thesis. Typically companies that face a prolonged period of reduction in earnings are undergoing some sort of reinvestment phase . However, if the entire industry is struggling to grow over time, it may be a sign of a structural shift, which makes Patriot Transportation Holding and its peers a higher risk investment. I suggest you continue to research Patriot Transportation Holding to get a better picture of the stock by looking at:

1. Financial Health: Is PATI’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. Valuation: What is PATI worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether PATI is currently mispriced by the market.

3. 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 last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. 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.

Advertisement