Understanding Tilly’s Inc’s (NYSE:TLYS) performance as a company requires examining more than earnings from one point in time. Today I will take you through a basic sense check to gain perspective on how Tilly’s is doing by evaluating its latest earnings with its longer term trend as well as its industry peers’ performance over the same period. See our latest analysis for Tilly’s
Could TLYS beat the long-term trend and outperform its industry?
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 blend allows me to examine various companies on a similar basis, using new information. For Tilly’s, its latest earnings (trailing twelve month) is US$14.30M, which compared to last year’s figure, has climbed up by a non-trivial 79.92%. Given that these values are somewhat nearsighted, I have computed an annualized five-year value for Tilly’s’s earnings, which stands at US$14.97M This suggests that, although earnings increased from last year’s level, over the long run, Tilly’s’s earnings have been declining on average.
What could be happening here? Let’s examine what’s going on with margins and if the entire industry is experiencing the hit as well. Revenue growth in the last couple of years, has been positive, nevertheless earnings growth has been declining. This implies that Tilly’s has been increasing expenses, which is hurting margins and earnings, and is not a sustainable practice. Looking at growth from a sector-level, the US specialty retail industry has been growing, albeit, at a subdued single-digit rate of 6.23% in the prior year, and 5.66% over the past five years. This means whatever tailwind the industry is benefiting from, Tilly’s is able to leverage this to its advantage.
What does this mean?
Tilly’s’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Recent positive growth doesn’t necessarily mean it’s onwards and upwards for the company. There may be variables that are influencing the entire industry thus the high industry growth rate over the same time frame. You should continue to research Tilly’s to get a better picture of the stock by looking at:
- 1. Future Outlook: What are well-informed industry analysts predicting for TLYS’s future growth? Take a look at our free research report of analyst consensus for TLYS’s outlook.
- 2. Financial Health: Is TLYS’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.
- 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 trailing twelve months from 28 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.