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Measuring Ceres Global Ag Corp.’s (TSE:CRP) track record of past performance is a valuable exercise for investors. It allows 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 CRP’s recent performance announced on 31 December 2018 and compare these figures to its historical trend and industry movements.
Was CRP’s recent earnings decline worse than the long-term trend and the industry?
CRP is loss-making, with the most recent trailing twelve-month earnings of -US$13.6m (from 31 December 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$9.1m. Each year, for the past five years CRP has seen an annual increase in operating expense growth, outpacing revenue growth of 21%, on average. This adverse movement is a driver of the company’s inability to reach breakeven.
Viewing growth from a sector-level, the Canadian commercial services industry has been
Since Ceres Global Ag is loss-making, with operating expenses (opex) growing year-on-year at 5.0%, it may need to raise more cash over the next year. It currently has US$1.9m in cash and short-term investments, however, opex (SG&A and one-year R&D) reached US$13m in the latest twelve months. Although this is a relatively simplistic calculation, and Ceres Global Ag may reduce its costs or open a new line of credit instead of issuing new equity shares, the analysis still helps us understand how sustainable the Ceres Global Ag’s operation is, and when things may have to change.
What does this mean?
Though Ceres Global Ag’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always hard to forecast what will occur going forward, and when. The most useful step is to assess company-specific issues Ceres Global Ag may be facing and whether management guidance has regularly been met in the past. You should continue to research Ceres Global Ag to get a better picture of the stock by looking at:
- Financial Health: Are CRP’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 December 2018. This may not be consistent with full year annual report figures.
To help readers see past 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. For errors that warrant correction please contact the editor at firstname.lastname@example.org.