When Entek Energy Limited (ASX:ETE) released its most recent earnings update (30 June 2017), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were Entek Energy’s average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not ETE actually performed well. Below is a quick commentary on how I see ETE has performed. View our latest analysis for Entek Energy
Commentary On ETE’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 assess different stocks on a similar basis, using the most relevant data points. For Entek Energy, its latest earnings (trailing twelve month) is -AU$536.81K, which, relative to the previous year’s level, has become less negative. Since these figures may be somewhat short-term thinking, I’ve created an annualized five-year value for Entek Energy’s net income, which stands at -AU$7.04M. This suggests that, even though net income is negative, it has become less negative over the years.We can further examine Entek Energy’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Entek Energy has seen an annual decline in revenue of -30.60%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Eyeballing growth from a sector-level, the Australian oil and gas industry has been multiplying growth, more than doubling average earnings over the previous year, and a notable 10.94% over the past five years. This suggests that whatever tailwind the industry is benefiting from, Entek Energy has not been able to realize the gains unlike its average peer.
What does this mean?
Though Entek Energy’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 insightful step is to examine company-specific issues Entek Energy may be facing and whether management guidance has steadily been met in the past. I suggest you continue to research Entek Energy to get a better picture of the stock by looking at:
- 1. Financial Health: Is ETE’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. 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.