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Should TSR Inc’s (TSRI) Earnings Decline In Recent Times Worry You?

Today I will take a look at TSR Inc’s (NASDAQ:TSRI) most recent earnings update (31 August 2017) and compare these latest figures against its performance over the past few years, as well as how the rest of the it services industry performed. As an investor, I find it beneficial to assess TSRI’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. See our latest analysis for TSRI

Did TSRI perform worse than its track record and industry?

I look at 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 allows me to examine different companies on a more comparable basis, using the latest information. For TSR, the most recent twelve-month earnings is $0M, which, in comparison to the previous year’s level, has taken a dive by a large -36.72%. Since these figures are somewhat nearsighted, I’ve calculated an annualized five-year figure for TSR’s net income, which stands at $0M. This means although earnings declined from the prior year, over a longer period of time, TSR’s earnings have been growing on average.

NasdaqCM:TSRI Income Statement Nov 16th 17
NasdaqCM:TSRI Income Statement Nov 16th 17

What’s the driver of this growth? Let’s take a look at if it is merely due to an industry uplift, or if TSR has seen some company-specific growth. Over the past couple of years, TSR expanded its bottom line faster than revenue by successfully controlling its costs. This has caused a margin expansion and profitability over time. Eyeballing growth from a sector-level, the US it services industry has been growing, albeit, at a unexciting single-digit rate of 4.88% in the previous year, and a substantial 10.52% over the previous five years. This means that any near-term headwind the industry is facing, it’s hitting TSR harder than its peers.

What does this mean?

TSR’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies are profitable, but have volatile earnings, can have many factors impacting its business. I recommend you continue to research TSR to get a better picture of the stock by looking at:

1. Financial Health: Is TSRI’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 TSRI 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 TSRI 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.