After looking at Whiting Petroleum Corporation’s (NYSE:WLL) latest earnings announcement (31 December 2017), I found it useful to revisit the company’s performance in the past couple of years and assess this against the most recent figures. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways. Check out our latest analysis for Whiting Petroleum
Did WLL beat its long-term earnings growth trend and its industry?
To account for any quarterly or half-yearly updates, I use data from the most recent 12 months, 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 analyze different stocks on a more comparable basis, using the latest information. For Whiting Petroleum, its most recent trailing-twelve-month earnings is -US$1.24B, which compared to the previous year’s figure, has become less negative. Given that these values may be relatively myopic, I have computed an annualized five-year figure for Whiting Petroleum’s earnings, which stands at -US$374.40M. This shows that, Whiting Petroleum has historically performed better than recently, even though it seems like earnings are now heading back towards a more favorable position once more.We can further examine Whiting Petroleum’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Whiting Petroleum has seen an annual decline in revenue of -3.60%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Eyeballing growth from a sector-level, the US oil and gas industry has been growing its average earnings by double-digit 23.01% in the past year, . This is a change from a volatile drop of -8.65% in the previous couple of years. This means any uplift the industry is enjoying, Whiting Petroleum has not been able to gain as much as its industry peers.
What does this mean?
Though Whiting Petroleum’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 predict what will happen in the future and when. The most useful step is to assess company-specific issues Whiting Petroleum may be facing and whether management guidance has steadily been met in the past. I suggest you continue to research Whiting Petroleum to get a better picture of the stock by looking at:
- 1. Future Outlook: What are well-informed industry analysts predicting for WLL’s future growth? Take a look at our free research report of analyst consensus for WLL’s outlook.
- 2. Financial Health: Is WLL’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.