Stock Analysis

Aban Offshore Limited's (NSE:ABAN) Earnings Dropped -89.54%, Did Its Industry Show Weakness Too?

NSEI:ABAN
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Assessing Aban Offshore Limited's (NSEI:ABAN) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess ABAN's recent performance announced on 31 December 2017 and evaluate these figures to its long-term trend and industry movements. See our latest analysis for Aban Offshore

Was ABAN's weak performance lately a part of a long-term decline?

To account for any quarterly or half-yearly updates, 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 method enables me to examine different companies in a uniform manner using the latest information. For Aban Offshore, its most recent trailing-twelve-month earnings is -₹11.63B, which compared to the prior year's level, has become more negative. Given that these values may be fairly short-term, I have computed an annualized five-year figure for ABAN's net income, which stands at ₹234.24M.

NSEI:ABAN Income Statement Apr 20th 18
NSEI:ABAN Income Statement Apr 20th 18
We can further examine Aban Offshore's loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Aban Offshore has seen an annual decline in revenue of -7.42%, on average. This adverse movement is a driver of the company's inability to reach breakeven. Has the entire industry experienced this headwind? Viewing growth from a sector-level, the IN energy services industry has been multiplying average earnings growth of 72.30% in the prior year, and a solid 31.84% over the last five years. This shows that whatever tailwind the industry is profiting from, Aban Offshore has not been able to leverage it as much as its average peer.

What does this mean?

Aban Offshore's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. With companies that are currently loss-making, it is always hard to predict what will occur going forward, and when. The most valuable step is to examine company-specific issues Aban Offshore may be facing and whether management guidance has steadily been met in the past. You should continue to research Aban Offshore to get a more holistic view of the stock by looking at:

  1. Financial Health: Is ABAN’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. Valuation: What is ABAN worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether ABAN is currently mispriced by the market.
  3. 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.

Valuation is complex, but we're helping make it simple.

Find out whether Aban Offshore is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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.