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 Nine Energy Service Inc (NYSE:NINE) useful as an attempt to give more color around how Nine Energy Service is currently performing. See our latest analysis for Nine Energy Service
How Well Did NINE Perform?
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 enables me to examine different companies on a similar basis, using new information. For Nine Energy Service, its latest trailing-twelve-month earnings is -US$45.29M, which, in comparison to the prior year’s level, has become less negative. Given that these figures are fairly myopic, I have created an annualized five-year value for NINE’s earnings, which stands at -US$62.16M. This means though net income is negative, it has become less negative over the years.We can further analyze Nine Energy Service’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Nine Energy Service’s top-line has increased by 16.22% on average, implying that the company is in a high-growth period with expenses shooting ahead of revenues, leading to annual losses. Scanning growth from a sector-level, the US energy services industry has been growing its average earnings by double-digit 25.89% over the past twelve months, . This is a change from a volatile drop of -18.06% in the previous couple of years. This means that, although Nine Energy Service is currently unprofitable, it may have only just gained from the recent industry expansion, moving earnings in the right direction.
What does this mean?
Nine Energy Service’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 envisage what will occur going forward, and when. The most useful step is to assess company-specific issues Nine Energy Service may be facing and whether management guidance has steadily been met in the past. I suggest you continue to research Nine Energy Service to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for NINE’s future growth? Take a look at our free research report of analyst consensus for NINE’s outlook.
- Financial Health: Is NINE’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.