After looking at Adlabs Entertainment Limited’s (NSEI:ADLABS) latest earnings announcement (31 March 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 Adlabs Entertainment’s performance has been impacted by industry movements. In this article I briefly touch on my key findings. See our latest analysis for Adlabs Entertainment
Despite a decline, did ADLABS underperform the long-term trend and the industry?
For the most up-to-date info, I use data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This method allows me to assess various companies in a uniform manner using the most relevant data points. For Adlabs Entertainment, its latest trailing-twelve-month earnings is -₹1.18B, which compared to last year’s figure, has become more negative. Since these values are relatively myopic, I’ve calculated an annualized five-year value for Adlabs Entertainment’s net income, which stands at -₹707.73M. This doesn’t seem to paint a better picture, as earnings seem to have gradually been getting more and more negative over time.
We can further assess Adlabs Entertainment’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Adlabs Entertainment’s top-line has grown by 23.31% on average, indicating that the company is in a high-growth period with expenses shooting ahead of revenues, leading to annual losses. Scanning growth from a sector-level, the IN hospitality industry has been enduring some headwinds in the prior twelve months, leading to an average earnings drop of -4.84%. This is a major change, given that the industry has been delivering a positive rate of 5.51%, on average, over the previous five years. This shows that whatever recent headwind the industry is experiencing, it’s hitting Adlabs Entertainment harder than its peers.
What does this mean?
Adlabs Entertainment’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. With companies that are currently loss-making, it is always difficult to predict what will occur going forward, and when. The most useful step is to examine company-specific issues Adlabs Entertainment may be facing and whether management guidance has regularly been met in the past. You should continue to research Adlabs Entertainment to get a better picture of the stock by looking at: