SAExploration Holdings Inc (NASDAQ:SAEX): Should The Recent Earnings Drop Worry You?

For long-term investors, assessing earnings trend over time and against industry benchmarks is more beneficial than examining a single earnings announcement at a point in time. Investors may find my commentary, albeit very high-level and brief, on SAExploration Holdings Inc (NASDAQ:SAEX) useful as an attempt to give more color around how SAExploration Holdings is currently performing. View our latest analysis for SAExploration Holdings

Was SAEX's recent earnings decline indicative of a tough track record?

I use data from the most recent 12 months, 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 allows me to assess different companies on a more comparable basis, using the latest information. For SAExploration Holdings, its latest earnings (trailing twelve month) is -US$40.76M, which, against the prior year's level, has become more negative. Since these figures may be relatively short-term thinking, I’ve created an annualized five-year figure for SAEX's earnings, which stands at -US$20.32M. This doesn’t seem to paint a better picture, as earnings seem to have steadily been getting more and more negative over time.

We can further evaluate SAExploration Holdings's loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years SAExploration Holdings has seen an annual decline in revenue of -6.63%, on average. This adverse movement is a driver of the company's inability to reach breakeven. Has the entire industry experienced this headwind? Scanning growth from a sector-level, the US energy services industry has been growing its average earnings by double-digit 25.46% in the previous year, . This is a change from a volatile drop of -18.64% in the past couple of years. This means that any tailwind the industry is deriving benefit from, SAExploration Holdings has not been able to leverage it as much as its industry peers.

What does this mean?

Though SAExploration Holdings's past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always difficult to forecast what will occur going forward, and when. The most valuable step is to examine company-specific issues SAExploration Holdings may be facing and whether management guidance has steadily been met in the past. I suggest you continue to research SAExploration Holdings to get a more holistic view of the stock by looking at:

• 1. Financial Health: Is SAEX’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.
• 2. Valuation: What is SAEX worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether SAEX is currently mispriced by the market.
• 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com

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.