When Green Plains Partners LP (NASDAQ:GPP) announced its most recent earnings (31 March 2018), I did two things: looked at its past earnings track record, then look at what is happening in the industry. Understanding how Green Plains Partners performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see GPP has performed. View our latest analysis for Green Plains Partners
How Did GPP’s Recent Performance Stack Up Against Its Past?
For the purpose of this commentary, I like to 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 technique allows me to analyze different companies on a more comparable basis, using the latest information. For Green Plains Partners, its latest earnings (trailing twelve month) is US$56.12M, which, in comparison to last year’s level, has declined by -3.92%. Since these figures are fairly myopic, I have estimated an annualized five-year figure for Green Plains Partners’s net income, which stands at US$33.34M This means though earnings declined against the prior year, over the longer term, Green Plains Partners’s profits have been growing on average.What’s the driver of this growth? Let’s see whether it is only because of industry tailwinds, or if Green Plains Partners has experienced some company-specific growth. Over the last couple of years, Green Plains Partners increased its bottom line faster than revenue by successfully controlling its costs. This resulted in a margin expansion and profitability over time. Viewing growth from a sector-level, the US oil and gas industry has been growing its average earnings by double-digit 25.00% over the past year, . This is a turnaround from a volatile drop of -4.94% in the past few years. This shows that, in the recent industry expansion, Green Plains Partners has not been able to realize the gains unlike its industry peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that are profitable, but have capricious earnings, can have many factors affecting its business. I recommend you continue to research Green Plains Partners to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for GPP’s future growth? Take a look at our free research report of analyst consensus for GPP’s outlook.
- Financial Health: Is GPP’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.