When Serinus Energy Plc’s (WSE:SEN) announced its latest earnings (31 March 2018), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were Serinus Energy’s average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not SEN actually performed well. Below is a quick commentary on how I see SEN has performed. See our latest analysis for Serinus Energy
How Well Did SEN Perform?SEN is loss-making, with the most recent trailing twelve-month earnings of -zł15.69m (from 31 March 2018), which compared to last year has become less negative. Furthermore, the company’s loss seem to be growing over time, with the five-year earnings average of -zł46.32m. Each year, for the past five years SEN has seen an annual decline in revenue of -21.03%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Scanning growth from a sector-level, the PL oil and gas industry has been enduring some headwinds in the prior year, leading to an average earnings drop of -3.04%. This is a significant change, given that the industry has been delivering a positive rate of 5.48%, on average, over the past half a decade. This suggests that even though Serinus Energy is currently loss-making, any recent headwind the industry is facing, Serinus Energy is relatively better-cushioned than its peers.
Given that Serinus Energy is not profitable, even if operating expenses (SG&A and one-year R&D) continues to fall at previous year’s rate of -25.00%, the company’s current cash level (zł3.47m) will still be insufficient to cover its expenses in the upcoming year. This is not a great sign in terms of operations and cash management. Even though this is analysis is fairly basic, and Serinus Energy still can cut its overhead further, or open a new line of credit instead of issuing new equity shares, the analysis still helps us understand how sustainable the Serinus Energy’s operation is, and when things may have to change.
What does this mean?
Serinus Energy’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 difficult to predict what will occur going forward, and when. The most useful step is to assess company-specific issues Serinus Energy may be facing and whether management guidance has consistently been met in the past. I suggest you continue to research Serinus Energy to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for SEN’s future growth? Take a look at our free research report of analyst consensus for SEN’s outlook.
- Financial Health: Is SEN’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.