Should You Be Concerned With Sunworks Inc’s (NASDAQ:SUNW) -64.22% Earnings Drop?

Measuring Sunworks Inc’s (NASDAQ:SUNW) track record of past performance is a valuable exercise for investors. It allows us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess SUNW’s recent performance announced on 30 September 2017 and compare these figures to its historical trend and industry movements. View our latest analysis for Sunworks

Was SUNW’s recent earnings decline indicative of a tough track record?

For the most up-to-date info, I 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 enables me to assess different companies on a more comparable basis, using the latest information. For Sunworks, its most recent trailing-twelve-month earnings is -US$7.46M, which compared to last year’s level, has become more negative. Given that these values are fairly short-term thinking, I’ve created an annualized five-year figure for SUNW’s net income, which stands at -US$6.38M. This doesn’t seem to paint a better picture, as earnings seem to have consistently been getting more and more negative over time.

NasdaqCM:SUNW Income Statement Mar 28th 18
NasdaqCM:SUNW Income Statement Mar 28th 18
We can further examine Sunworks’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Sunworks’s top-line has increased by 52.69% on average, indicating that the company is in a high-growth period with expenses racing ahead revenues, leading to annual losses. Scanning growth from a sector-level, the US electrical industry has been growing, albeit, at a muted single-digit rate of 4.94% in the previous year, and 9.92% over the previous five years. This suggests that whatever recent headwind the industry is facing, it’s hitting Sunworks harder than its peers.

What does this mean?

Though Sunworks’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always hard to predict what will occur going forward, and when. The most insightful step is to examine company-specific issues Sunworks may be facing and whether management guidance has steadily been met in the past. I suggest you continue to research Sunworks to get a better picture of the stock by looking at:

  • 1. Future Outlook: What are well-informed industry analysts predicting for SUNW’s future growth? Take a look at our free research report of analyst consensus for SUNW’s outlook.
  • 2. Financial Health: Is SUNW’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.
  • 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 30 September 2017. This may not be consistent with full year annual report figures.