Yahoo Finance With A -56.98% Earnings Drop, Did Pandora Media Inc (NYSE:P) Really Underperform?
Investors with a long-term horizong may find it valuable to assess Pandora Media Inc’s (NYSE:P) earnings trend over time and against its industry benchmark as opposed to simply looking at a sincle earnings announcement at one point in time. Below is my commentary, albiet very simple and high-level, on how Pandora Media is currently performing. See our latest analysis for Pandora Media
How Did P’s Recent Performance Stack Up Against Its Past?
P is loss-making, with the most recent trailing twelve-month earnings of -US$565.36m (from 31 March 2018), which compared to last year has become more negative. Furthermore, the company’s loss seem to be growing over time, with the five-year earnings average of -US$162.17m. Each year, for the past five years P has seen an annual increase in operating expense growth, outpacing revenue growth of 25.40%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Scanning growth from a sector-level, the US internet industry has been growing its average earnings by double-digit 17.40% over the previous twelve months, and 18.27% over the last five years. This means any uplift the industry is profiting from, Pandora Media has not been able to realize the gains unlike its average peer.
Since Pandora Media is loss-making, with operating expenses (opex) growing year-on-year at 25.00%, it may need to raise more cash over the next year. It currently has US$544.41m in cash and short-term investments, however, opex (SG&A and one-year R&D) reached US$825.39m in the latest twelve months. Even though this is analysis is fairly basic, and Pandora Media still can cut its overhead in the near future, or open a new line of credit instead of issuing new equity shares, the analysis still gives us an idea of the company’s timeline and when things will have to start changing, since its current operation is unsustainable.
What does this mean?
Though Pandora Media’s past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always difficult to predict what will happen in the future and when. The most useful step is to assess company-specific issues Pandora Media may be facing and whether management guidance has regularly been met in the past. I suggest you continue to research Pandora Media to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for P’s future growth? Take a look at our free research report of analyst consensus for P’s outlook.
Financial Health: Is P’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.
