Does Petratherm Limited’s (ASX:PTR) Earnings Growth Make It An Outperformer?

In this article, I will take a look at Petratherm Limited’s (ASX:PTR) most recent earnings update (31 December 2017) and compare these latest figures against its performance over the past few years, along with how the rest of PTR’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. Check out our latest analysis for Petratherm

How Well Did PTR Perform?

I like to use 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 blend allows me to examine different stocks on a similar basis, using new information. For Petratherm, its most recent bottom-line (trailing twelve month) is -AU$346.38K, which, in comparison to last year’s figure, has become less negative. Given that these figures may be fairly nearsighted, I’ve calculated an annualized five-year figure for PTR’s net income, which stands at -AU$3.53M. This shows that, despite the fact that net income is negative, it has become less negative over the years.

ASX:PTR Income Statement Apr 19th 18
ASX:PTR Income Statement Apr 19th 18
We can further assess Petratherm’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Petratherm has seen an annual decline in revenue of -44.91%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Inspecting growth from a sector-level, the Australian renewable energy industry has been enduring some headwinds in the prior twelve months, leading to an average earnings drop of -10.49%. This is a major change, given that the industry has constantly been delivering a a strong growth of 12.33% in the previous five years. This means despite the fact that Petratherm is presently unprofitable, whatever near-term headwind the industry is enduring, the impact on Petratherm has been softer relative to its peers.

What does this mean?

Though Petratherm’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 envisage what will occur going forward, and when. The most valuable step is to examine company-specific issues Petratherm may be facing and whether management guidance has steadily been met in the past. I suggest you continue to research Petratherm to get a better picture of the stock by looking at:

  1. Financial Health: Is PTR’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.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2017. This may not be consistent with full year annual report figures.