Was Golar LNG Partners LP's (NASDAQ:GMLP) Earnings Decline Part Of A Broader Industry Downturn?

When Golar LNG Partners LP (NASDAQ:GMLP) released its most recent earnings update (31 December 2017), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were Golar LNG Partners's average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not GMLP actually performed well. Below is a quick commentary on how I see GMLP has performed. See our latest analysis for Golar LNG Partners

How Well Did GMLP Perform?

I use the ‘latest twelve-month’ data, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This allows me to assess different stocks in a uniform manner using the latest information. For Golar LNG Partners, its most recent trailing-twelve-month earnings is US$127.20M, which, relative to the prior year's level, has plunged by -26.12%. Given that these values may be relatively short-term, I’ve calculated an annualized five-year value for GMLP's net income, which stands at US$132.60M This doesn’t seem to paint a better picture, since earnings seem to have consistently been deteriorating over the longer term.

Why is this? Well, let's look at what's transpiring with margins and whether the rest of the industry is experiencing the hit as well. In the last few years, revenue growth has fallen behind which indicates that Golar LNG Partners’s bottom line has been propelled by unmaintainable cost-reductions. Looking at growth from a sector-level, the US oil and gas industry has been growing its average earnings by double-digit 22.25% over the prior year, . This is a change from a volatile drop of -5.78% in the past few years. This shows that, in the recent industry expansion, Golar LNG Partners has not been able to realize the gains unlike its industry peers.

What does this mean?

Though Golar LNG Partners's past data is helpful, it is only one aspect of my investment thesis. Typically companies that experience an extended period of reduction in earnings are going through some sort of reinvestment phase with the aim of keeping up with the recent industry growth and disruption. I suggest you continue to research Golar LNG Partners to get a better picture of the stock by looking at:

1. Future Outlook: What are well-informed industry analysts predicting for GMLP’s future growth? Take a look at our free research report of analyst consensus for GMLP’s outlook.
2. Financial Health: Is GMLP’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 31 December 2017. This may not be consistent with full year annual report figures.

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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.