After looking at Benefitfocus Inc’s (NASDAQ:BNFT) latest earnings announcement (31 December 2017), I found it useful to revisit the company’s performance in the past couple of years and assess this against the most recent figures. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether Benefitfocus’s performance has been impacted by industry movements. In this article I briefly touch on my key findings. See our latest analysis for Benefitfocus
How Well Did BNFT Perform?
I look at 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 enables me to examine various companies on a more comparable basis, using the latest information. For Benefitfocus, its most recent trailing-twelve-month earnings is -US$25.87M, which, in comparison to last year’s figure, has become less negative. Since these values may be relatively short-term, I’ve computed an annualized five-year figure for Benefitfocus’s earnings, which stands at -US$40.64M. This suggests that, though net income is negative, it has become less negative over the years.
We can further examine Benefitfocus’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Benefitfocus’s top-line has risen by 22.89% on average, indicating that the company is in a high-growth period with expenses racing ahead revenues, leading to annual losses. Eyeballing growth from a sector-level, the US internet industry has been growing its average earnings by double-digit 14.78% in the past twelve months, and 16.95% over the last five years. This suggests that, despite the fact that Benefitfocus is currently unprofitable, it may have gained from industry tailwinds, moving earnings in the right direction.
What does this mean?
Though Benefitfocus’s past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always hard to predict what will occur going forward, and when. The most insightful step is to examine company-specific issues Benefitfocus may be facing and whether management guidance has consistently been met in the past. I suggest you continue to research Benefitfocus to get a better picture of the stock by looking at:
- 1. Future Outlook: What are well-informed industry analysts predicting for BNFT’s future growth? Take a look at our free research report of analyst consensus for BNFT’s outlook.
- 2. Financial Health: Is BNFT’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 31 December 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.