When Hortonworks Inc (NASDAQ:HDP) released its most recent earnings update (30 September 2017), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were Hortonworks’s average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not HDP actually performed well. Below is a quick commentary on how I see HDP has performed. See our latest analysis for Hortonworks
Did HDP beat its long-term earnings growth trend and its industry?
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 blend allows me to assess different stocks on a similar basis, using new information. For Hortonworks, its most recent bottom-line is -$213.3M, which, in comparison to the previous year’s figure, has become less negative. Since these values are somewhat myopic, I’ve determined an annualized five-year figure for Hortonworks’s net income, which stands at -$165.9M. This means Hortonworks has historically performed better than recently, while it seems like earnings are now heading back towards to right direction again.
Additionally, we can examine Hortonworks’s loss by looking at what has been happening in the industry as well as within the company. Initially, I want to briefly look into the line items. Revenue growth over the last couple of years has risen by 47.36%, signalling that Hortonworks is in a high-growth period with expenses racing ahead elevated top-line growth rates, leading to yearly losses. Viewing growth from a sector-level, the US internet industry has been growing, albeit, at a unexciting single-digit rate of 7.42% over the prior year, and a substantial 15.52% over the previous five years. This suggests that, while Hortonworks is currently loss-making, it may have gained from industry tailwinds, moving earnings towards to right direction.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that incur net loss is always difficult to forecast what will occur going forward, and when. The most insightful step is to examine company-specific issues Hortonworks may be facing and whether management guidance has dependably been met in the past. I recommend you continue to research Hortonworks to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for HDP’s future growth? Take a look at our free research report of analyst consensus for HDP’s outlook.
2. Financial Health: Is HDP’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 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.