In this article, I will take a look at HD Supply Holdings Inc’s (NASDAQ:HDS) most recent earnings update (29 October 2017) and compare these latest figures against its performance over the past few years, along with how the rest of HDS’s industry performed. As a long-term investor, I find it useful to analyze the company’s trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time. View our latest analysis for HD Supply Holdings

Was HDS’s recent earnings decline indicative of a tough track record?

For the most up-to-date info, I 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 allows me to assess different companies on a similar basis, using the most relevant data points. For HD Supply Holdings, its most recent bottom-line (trailing twelve month) is US$349.00M, which, in comparison to last year’s level, has taken a dive by a large -65.55%. Since these figures may be fairly nearsighted, I’ve calculated an annualized five-year value for HD Supply Holdings’s earnings, which stands at US$69.14M This means though earnings growth was negative from the prior year, over the past couple of years, HD Supply Holdings’s profits have been increasing on average.

What’s the driver of this growth? Let’s see if it is merely a result of an industry uplift, or if HD Supply Holdings has experienced some company-specific growth. In the past few years, HD Supply Holdings increased bottom-line, while its top-line fell, by efficiently managing its costs. This resulted in to a margin expansion and profitability over time. Looking at growth from a sector-level, the US trade distributors industry has been growing its average earnings by double-digit 49.66% in the previous year, and a more muted 7.36% over the past half a decade. This means any tailwind the industry is benefiting from, HD Supply Holdings has not been able to leverage it as much as its industry peers.

What does this mean?

HD Supply Holdings’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that are profitable, but have capricious earnings, can have many factors influencing its business. I recommend you continue to research HD Supply Holdings to get a better picture of the stock by looking at the areas below. Just a heads up – to access some parts of the Simply Wall St research tool you might be asked to create a free account, but it takes just one click and the information they provide is definitely worth it in my opinion.