Does Professional Diversity Network Inc’s (NASDAQ:IPDN) -23.2% Earnings Decline Reflect A Long-Term Trend?
Today I will examine Professional Diversity Network Inc’s (NASDAQ:IPDN) latest earnings update (30 September 2017) and compare these figures against its performance over the past couple of years, in addition to how the rest of IPDN’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. See our latest analysis for Professional Diversity Network
Was IPDN’s recent earnings decline indicative of a tough track record?
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 technique enables me to analyze different stocks on a similar basis, using the latest information. For Professional Diversity Network, its latest earnings is -$18.3M, which, in comparison to the prior year’s figure, has become more negative. Since these figures are somewhat short-term thinking, I’ve calculated an annualized five-year figure for Professional Diversity Network’s net income, which stands at -$8.6M. This doesn’t seem to paint a better picture, since earnings seem to have gradually been getting more and more negative over time.
We can further evaluate Professional Diversity Network’s loss by researching what has been happening in the industry as well as within the company. Initially, I want to briefly look into the line items. Revenue growth over the past few years has increased by 32.04%, signalling that Professional Diversity Network is in a high-growth phase with expenses shooting ahead of high top-line growth rates, leading to yearly losses. Viewing growth from a sector-level, the US internet industry has been growing, albeit, at a unexciting single-digit rate of 7.42% over the prior year, and a substantial 15.52% over the previous few years. This suggests that any uplift the industry is benefiting from, Professional Diversity Network has not been able to leverage it as much as its industry peers.
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 hard to forecast what will happen in the future and when. The most valuable step is to assess company-specific issues Professional Diversity Network may be facing and whether management guidance has regularly been met in the past. I recommend you continue to research Professional Diversity Network to get a more holistic view of the stock by looking at: