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Should Cathedral Energy Services Ltd's (TSE:CET) Recent Earnings Decline Worry You?
When Cathedral Energy Services Ltd's (TSX:CET) announced its latest earnings (31 December 2017), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were Cathedral Energy Services's average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not CET actually performed well. Below is a quick commentary on how I see CET has performed. Check out our latest analysis for Cathedral Energy Services
Did CET perform worse than its track record and industry?
For the most up-to-date info, I use the ‘latest twelve-month’ data, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This blend allows me to assess different companies in a uniform manner using the most relevant data points. For Cathedral Energy Services, its most recent bottom-line (trailing twelve month) is CA$229.00K, which, relative to the prior year's level, has declined by a non-trivial -91.25%. Since these figures may be fairly nearsighted, I’ve computed an annualized five-year figure for Cathedral Energy Services's earnings, which stands at CA$4.47M This doesn’t seem to paint a better picture, since earnings seem to have gradually been falling over the longer term.
What does this mean?
Though Cathedral Energy Services's past data is helpful, it is only one aspect of my investment thesis. Typically companies that face a drawn out period of decline in earnings are going through some sort of reinvestment phase However, if the whole industry is struggling to grow over time, it may be a signal of a structural shift, which makes Cathedral Energy Services and its peers a riskier investment. I recommend you continue to research Cathedral Energy Services to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for CET’s future growth? Take a look at our free research report of analyst consensus for CET’s outlook.
- Financial Health: Is CET’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.
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Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
About TSX:ACX
ACT Energy Technologies
Provides directional drilling services to oil and natural gas companies in Canada and the United States.
Outstanding track record and undervalued.
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