Today I will examine Petroleum Geo-Services ASA’s (OB:PGS) latest earnings update (31 March 2018) and compare these figures against its performance over the past couple of years, in addition to how the rest of PGS’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 Petroleum Geo-Services
Did PGS perform worse than its track record and industry?
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 technique enables me to analyze many different companies in a uniform manner using new information. For Petroleum Geo-Services, its most recent bottom-line (trailing twelve month) is -US$456.90M, which, relative to the previous year’s figure, has become more negative. Given that these values are relatively myopic, I have estimated an annualized five-year figure for Petroleum Geo-Services’s earnings, which stands at -US$113.33M. This doesn’t seem to paint a better picture, as earnings seem to have gradually been getting more and more negative over time.We can further assess Petroleum Geo-Services’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Petroleum Geo-Services has seen an annual decline in revenue of -9.54%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Looking at growth from a sector-level, the NO energy services industry has been ramping up growth, more than doubling average earnings over the prior twelve months, . This is a a substantial turnaround from a volatile drop of -12.50% in the last few years. This means that whatever uplift the industry is enjoying, Petroleum Geo-Services has not been able to leverage it as much as its industry peers.
What does this mean?
Petroleum Geo-Services’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that incur net loss is always hard to forecast what will occur going forward, and when. The most valuable step is to examine company-specific issues Petroleum Geo-Services may be facing and whether management guidance has consistently been met in the past. I recommend you continue to research Petroleum Geo-Services to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for PGS’s future growth? Take a look at our free research report of analyst consensus for PGS’s outlook.
- Financial Health: Is PGS’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.