Where GoPro Inc (NASDAQ:GPRO) Stands In Earnings Growth Against Its Industry
After looking at GoPro Inc’s (NASDAQ:GPRO) latest earnings update (31 March 2018), I found it helpful to revisit the company’s performance in the past couple of years and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is an important aspect. In this article I briefly touch on my key findings. See our latest analysis for GoPro
How Well Did GPRO Perform?
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 method enables me to examine different companies on a more comparable basis, using the most relevant data points. For GoPro, its most recent bottom-line (trailing twelve month) is -US$148.07M, which, against last year’s figure, has become less negative. Since these values are fairly myopic, I’ve computed an annualized five-year figure for GPRO’s net income, which stands at -US$77.95M. This means GoPro has historically performed better than recently, despite the fact that it seems like earnings are now heading back towards to right direction again.
We can further analyze GoPro’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade GoPro’s top-line has risen by 10.49% on average, indicating that the company is in a high-growth period with expenses shooting ahead of revenues, leading to annual losses. Eyeballing growth from a sector-level, the US consumer durables industry has been growing its average earnings by double-digit 11.83% over the past year, and 16.56% over the past five. This shows that, while GoPro is currently unprofitable, it may have been aided by industry tailwinds, moving earnings into a more favorable position.
What does this mean?
Though GoPro’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always difficult to forecast what will occur going forward, and when. The most useful step is to assess company-specific issues GoPro may be facing and whether management guidance has consistently been met in the past. I recommend you continue to research GoPro to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for GPRO’s future growth? Take a look at our free research report of analyst consensus for GPRO’s outlook.
Financial Health: Is GPRO’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.
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 March 2018. 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.
