Barnwell Industries Inc’s (NYSEMKT:BRN) Earnings Dropped -145.09%, Did Its Industry Show Weakness Too?

When Barnwell Industries Inc (AMEX:BRN) released its most recent earnings update (31 March 2018), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Understanding how Barnwell Industries 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 BRN has performed. See our latest analysis for Barnwell Industries

Was BRN’s weak performance lately a part of a long-term decline?

For the most up-to-date info, I 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 enables me to examine many different companies in a uniform manner using the most relevant data points. For Barnwell Industries, its latest earnings (trailing twelve month) is -US$193.00K, which, against the prior year’s level, has turned from positive to negative. Since these figures are relatively nearsighted, I have determined an annualized five-year value for Barnwell Industries’s net income, which stands at -US$2.85M. This shows that, though net income is negative, it has become less negative over the years.

AMEX:BRN Income Statement May 24th 18
AMEX:BRN Income Statement May 24th 18
We can further analyze Barnwell Industries’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Barnwell Industries has seen an annual decline in revenue of -18.82%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? 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 previous year, . This is a turnaround from a volatile drop of -5.41% in the past few years. This shows that any tailwind the industry is profiting from, Barnwell Industries has not been able to gain as much as its average peer.

What does this mean?

While past data is useful, it doesn’t tell the whole story. With companies that are currently loss-making, it is always hard to envisage what will happen in the future and when. The most insightful step is to assess company-specific issues Barnwell Industries may be facing and whether management guidance has consistently been met in the past. I recommend you continue to research Barnwell Industries to get a better picture of the stock by looking at:

  1. Financial Health: Is BRN’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. 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 March 2018. This may not be consistent with full year annual report figures.