Are SGRP's earnings beats sustainable long-term?

**SGRP's earnings beat may not be sustainable in the long term** based on the following points: 1. **Recent Performance**: SGRP's net income and revenue have declined significantly, with a net income of -$232,000 and total revenue of $37.79 million in Q3 2024. The diluted EPS has also decreased by 200%. These figures indicate a recent deterioration in the company's financial performance. |code|Ticker|Name|Date|Total Revenue|Net Income|Diluted EPS|market_code| |---|---|---|---|---|---|---|---| |SGRP|SGRP.O|Spar Group|2023 Q4|6.5098E7|795000||186| |SGRP|SGRP.O|Spar Group|2024 Q1|6.8693E7|7181000|0.28|186| |SGRP|SGRP.O|Spar Group|2024 Q2|5.729E7|4075000|0.15|186| |SGRP|SGRP.O|Spar Group|2024 Q3|3.7788E7|-232000|-0.01|186| |code|Ticker|Name|Date|Net Income YoY|Total Revenue YoY|Diluted EPS YoY|market_code| |---|---|---|---|---|---|---|---| |SGRP|SGRP.O|Spar Group|2023 Q4|143.13619099294627|0.7054237183255468||186| |SGRP|SGRP.O|Spar Group|2024 Q1|304.1080472706809|6.69928549238894|600|186| |SGRP|SGRP.O|Spar Group|2024 Q2|268.4448462929476|-13.11271536034943|400|186| |SGRP|SGRP.O|Spar Group|2024 Q3|-121.12932604735884|-43.878930093713336|-200|186| 2. **Growth Rates**: The 3-year CAGRs for net income, revenue, and diluted EPS are 124.65%, 0.57%, and -633.33% respectively. The negative growth rate for diluted EPS suggests that the company has been losing earnings over the long term. 3. **Profitability Metrics**: SGRP has a high ROE of 35.15% and a ROA of 17.49%, which are positive indicators of profitability. However, the company's negative free cash flow of $1.03 million and operating cash flow of $900,000 suggest that the company may be struggling to generate cash to support its operations and growth. |code|Ticker|Name|Date|ROA|ROE(Average)|market_code| |---|---|---|---|---|---|---| |SGRP|SGRP.O|Spar Group|2023 Q4|9.7924|15.4068|186| |SGRP|SGRP.O|Spar Group|2024 Q1|9.8197|21.6643|186| |SGRP|SGRP.O|Spar Group|2024 Q2|19.6537|35.597|186| |SGRP|SGRP.O|Spar Group|2024 Q3|17.4915|35.1524|186| |code|Ticker|Name|Date|Free Cash Flow|Investing Cash Flow|Operating Cash Flow|Financing Cash Flow|market_code| |---|---|---|---|---|---|---|---|---| |SGRP|SGRP.O|Spar Group|2023 Q4|6515893.328|-1186000|5181000|-1504000|186| |SGRP|SGRP.O|Spar Group|2024 Q1|-2368757.13|-878000|615000|6344000|186| |SGRP|SGRP.O|Spar Group|2024 Q2|1.4697437585E7|1.184E7|-445000|-6453000|186| |SGRP|SGRP.O|Spar Group|2024 Q3|1.480127188E7|-1434000|-900000|319000|186| 4. **Valuation Metrics**: The company's P/E ratio is 2.43, which is relatively high. This could indicate that the market is currently valuing the company's earnings at a premium, which may be difficult to sustain in the long term. |code|Ticker|Name|Date|P/E(TTM)|P/S|Price to Book Ratio|market_code| |---|---|---|---|---|---|---|---| |SGRP|SGRP.O|Spar Group|20240405|4.686313|0|1.6047288468762184|186| |SGRP|SGRP.O|Spar Group|20240408|4.886797|0|1.6733803483468583|186| |SGRP|SGRP.O|Spar Group|20240409|4.285345|0|1.4674258439349375|186| |SGRP|SGRP.O|Spar Group|20240410|4.185103|0|1.4331000931996174|186| |SGRP|SGRP.O|Spar Group|20240411|4.460768|0|1.5274959077217478|186| |SGRP|SGRP.O|Spar Group|20240412|4.485829|0|1.5360773454055778|186| |SGRP|SGRP.O|Spar Group|20240415|4.335466|0|1.4845887193025975|186| |SGRP|SGRP.O|Spar Group|20240416|4.335466|0|1.4845887193025975|186| |SGRP|SGRP.O|Spar Group|20240417|4.435708|0|1.5189144700379178|186| |SGRP|SGRP.O|Spar Group|20240418|4.360526|0|1.4931701569864275|186| 5. **Analyst Expectations**: Analysts have decreased their Q2 2024 earnings per share estimates for SGRP, which could be a sign that the company's earnings may not be sustainable in the near term. 6. **Market Conditions**: The sustainability of SGRP's earnings will also depend on broader market conditions and the company's ability to adapt to changing market dynamics. Without information on these factors, it is difficult to assess the long-term sustainability of the company's earnings. In conclusion, while SGRP has shown some positive indicators of profitability, such as high ROE and ROA, the company's recent financial performance, negative cash flows, and high P/E ratio suggest that its earnings may not be sustainable in the long term. The company will need to demonstrate a consistent track record of profitability and cash generation, and adapt to changing market conditions, to sustain its earnings over the long term.