Where Paladin Energy Ltd (ASX:PDN) Stands In Terms Of Earnings Growth Against Its Industry

Measuring Paladin Energy Ltd’s (ASX:PDN) track record of past performance is a useful exercise for investors. It enables us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess PDN’s recent performance announced on 30 September 2017 and weigh these figures against its long-term trend and industry movements. Check out our latest analysis for Paladin Energy

Commentary On PDN’s Past Performance

I prefer to use the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This enables me to examine various companies on a similar basis, using the most relevant data points. For Paladin Energy, its most recent bottom-line (trailing twelve month) is -US$211.60M, which, relative to last year’s level, has become more negative. Since these values are fairly short-term, I’ve estimated an annualized five-year value for Paladin Energy’s earnings, which stands at -US$239.02M. This shows that, despite the fact that net income is negative, it has become less negative over the years.

ASX:PDN Income Statement Feb 27th 18
ASX:PDN Income Statement Feb 27th 18
We can further analyze Paladin Energy’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Paladin Energy has seen an annual decline in revenue of -14.54%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Scanning growth from a sector-level, the Australian oil and gas industry has been growing growth, more than doubling average earnings in the past year, and a more subdued 5.14% over the last five years. This suggests that whatever tailwind the industry is benefiting from, Paladin Energy has not been able to leverage it as much as its industry peers.

What does this mean?

Though Paladin Energy’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always difficult to envisage what will occur going forward, and when. The most valuable step is to examine company-specific issues Paladin Energy may be facing and whether management guidance has dependably been met in the past. You should continue to research Paladin Energy to get a better picture of the stock by looking at:

  • 1. Financial Health: Is PDN’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.
  • 2. Valuation: What is PDN worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether PDN is currently mispriced by the market.
  • 3. 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 30 September 2017. This may not be consistent with full year annual report figures.