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With A -24.94% Earnings Drop, Is KSK Energy Ventures Limited’s (NSE:KSK) A Concern?

When KSK Energy Ventures Limited (NSEI:KSK) released its most recent earnings update (31 December 2017), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well KSK Energy Ventures has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I’ve summarized the key takeaways on how I see KSK has performed. See our latest analysis for KSK Energy Ventures

Was KSK weak performance lately part of a long-term decline?

I like to use data from the most recent 12 months, 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 enables me to analyze many different companies in a uniform manner using the most relevant data points. For KSK Energy Ventures, its most recent bottom-line (trailing twelve month) is -₹5.42B, which, against last year’s level, has become more negative. Given that these values may be somewhat short-term, I have created an annualized five-year figure for KSK Energy Ventures’s net income, which stands at -₹2.08B. This doesn’t seem to paint a better picture, as earnings seem to have steadily been getting more and more negative over time.

NSEI:KSK Income Statement May 10th 18
NSEI:KSK Income Statement May 10th 18

We can further examine KSK Energy Ventures’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years KSK Energy Ventures’s top-line has grown by 16.28% on average, signalling that the company is in a high-growth period with expenses shooting ahead of revenues, leading to annual losses. Inspecting growth from a sector-level, the IN electric utilities industry has been growing its average earnings by double-digit 25.04% over the prior twelve months, and 15.00% over the previous five years. This suggests that whatever tailwind the industry is enjoying, KSK Energy Ventures has not been able to gain as much as its average peer.

What does this mean?

KSK Energy Ventures’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 hard to envisage what will occur going forward, and when. The most useful step is to assess company-specific issues KSK Energy Ventures may be facing and whether management guidance has dependably been met in the past. You should continue to research KSK Energy Ventures to get a better picture of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for KSK’s future growth? Take a look at our free research report of analyst consensus for KSK’s outlook.

  2. Financial Health: Is KSK’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.

NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2017. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.

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