After reading Française de l’Energie SA’s (ENXTPA:LFDE) most recent earnings announcement (31 December 2017), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways. See our latest analysis for Française de l’Energie
Commentary On LFDE’s Past Performance
I prefer to use data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This blend allows me to assess various companies on a more comparable basis, using the latest information. For Française de l’Energie, its latest earnings (trailing twelve month) is -€2.18M, which, relative to the prior year’s level, has become less negative. Given that these values may be fairly nearsighted, I’ve determined an annualized five-year value for LFDE’s net income, which stands at -€3.13M. This shows that, though net income is negative, it has become less negative over the years.We can further examine Française de l’Energie’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Française de l’Energie’s top-line more than doubled on average, signalling that the business is in a high-growth period with expenses shooting ahead of revenues, leading to annual losses. Scanning growth from a sector-level, the FR oil and gas industry has been growing its average earnings by double-digit 13.16% over the previous twelve months, and a less exciting 9.98% over the last five years. This means although Française de l’Energie is presently unprofitable, it may have been aided by industry tailwinds, moving earnings into a more favorable position.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that incur net loss is always difficult to envisage what will happen in the future and when. The most insightful step is to examine company-specific issues Française de l’Energie may be facing and whether management guidance has regularly been met in the past. You should continue to research Française de l’Energie to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for LFDE’s future growth? Take a look at our free research report of analyst consensus for LFDE’s outlook.
- Financial Health: Is LFDE’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.