After reading Ormat Technologies Inc’s (NYSE:ORA) latest earnings update (30 September 2017), I found it beneficial to look back at how the company has performed in the past and compare this against the most recent numbers. As a long-term investor I tend to pay attention to earnings trend, rather than a single number at one point in time. I also like to compare against an industry benchmark to understand whether ORA has outperformed, or whether it is simply riding an industry wave. Below is a brief commentary on my key takeaways. Check out our latest analysis for Ormat Technologies
How ORA fared against its long-term earnings performance 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 technique allows me to assess different companies in a uniform manner using the latest information. For Ormat Technologies, its latest earnings (trailing twelve month) is US$117.76M, which, in comparison to the prior year’s level, has risen by 32.78%. Since these values are somewhat short-term thinking, I have estimated an annualized five-year figure for Ormat Technologies’s net income, which stands at US$16.58M This means generally, Ormat Technologies has been able to increasingly grow its profits over the past couple of years as well.What’s enabled this growth? Let’s take a look at whether it is only due to industry tailwinds, or if Ormat Technologies has seen some company-specific growth. Over the past couple of years, Ormat Technologies grew its bottom line faster than revenue by effectively controlling its costs. This has caused a margin expansion and profitability over time. Looking at growth from a sector-level, the US renewable energy industry has been relatively flat in terms of earnings growth over the previous year, levelling off from a solid 10.95% over the past half a decade. This shows that any near-term headwind the industry is facing, Ormat Technologies is relatively better-cushioned than its peers.
What does this mean?
Though Ormat Technologies’s past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? You should continue to research Ormat Technologies to get a better picture of the stock by looking at:
- 1. Future Outlook: What are well-informed industry analysts predicting for ORA’s future growth? Take a look at our free research report of analyst consensus for ORA’s outlook.
- 2. Financial Health: Is ORA’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.