Did Groupon Inc’s (NASDAQ:GRPN) Recent Earnings Growth Beat The Trend?
Understanding how Groupon Inc (NASDAQ:GRPN) is performing as a company requires looking at more than just a years’ earnings. Today I will run you through a basic sense check to gain perspective on how Groupon is doing by comparing its latest earnings with its long-term trend as well as the performance of its online retail industry peers. Check out our latest analysis for Groupon
How GRPN fared against its long-term earnings performance and its industry
I look at the ‘latest twelve-month’ data, 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 enables me to examine different stocks on a more comparable basis, using new information. For Groupon, its most recent trailing-twelve-month earnings is -$90.9M, which, against the prior year’s level, has become less negative. Given that these figures may be relatively short-term thinking, I have created an annualized five-year value for GRPN’s net income, which stands at -$177.8M. This means while net income is negative, it has become less negative over the years.
Additionally, we can analyze Groupon’s loss by looking at what’s going on in the industry as well as within the company. Firstly, I want to briefly look into the line items. Revenue growth over the past couple of years has increased by 12.71%, implying that Groupon is in a high-growth phase with expenses racing ahead high top-line growth rates, leading to yearly losses. Scanning growth from a sector-level, the US online retail industry has been growing average earnings growth of 80.31% in the past year, and a robust 13.08% over the previous five years. This shows that whatever uplift the industry is enjoying, Groupon has not been able to leverage it as much as its average peer.
What does this mean?
While past data is useful, it doesn’t tell the whole story. With companies that are currently loss-making, it is always difficult to envisage what will occur going forward, and when. The most valuable step is to assess company-specific issues Groupon may be facing and whether management guidance has dependably been met in the past. You should continue to research Groupon to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for GRPN’s future growth? Take a look at our free research report of analyst consensus for GRPN’s outlook.
2. Financial Health: Is GRPN’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 30 September 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.
