After reading ClearSign Combustion Corporation’s (NASDAQ:CLIR) most recent earnings announcement (30 September 2017), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. 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 ClearSign Combustion
How Did CLIR’s Recent Performance Stack Up Against Its Past?
I like to use the ‘latest twelve-month’ data, 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 blend enables me to assess different companies on a similar basis, using the most relevant data points. For ClearSign Combustion, its most recent bottom-line (trailing twelve month) is -US$9.39M, which, relative to last year’s level, has become less negative. Given that these figures may be fairly short-term thinking, I’ve created an annualized five-year value for CLIR’s net income, which stands at -US$6.29M. This shows that, ClearSign Combustion has historically performed better than recently, while it seems like earnings are now heading back in the right direction again.We can further assess ClearSign Combustion’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade ClearSign Combustion’s top-line has grown by 60.72% on average, indicating that the company is in a high-growth period with expenses racing ahead revenues, leading to annual losses. Inspecting growth from a sector-level, the US electronic industry has been growing its average earnings by double-digit 19.08% over the previous year, and 10.80% over the last five years. This means that any tailwind the industry is deriving benefit from, ClearSign Combustion has not been able to realize the gains unlike its average peer.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that incur net loss is always difficult to envisage what will occur going forward, and when. The most insightful step is to examine company-specific issues ClearSign Combustion may be facing and whether management guidance has consistently been met in the past. I suggest you continue to research ClearSign Combustion to get a more holistic view of the stock by looking at:
- 1. Financial Health: Is CLIR’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.