Examining how Alliance Resource Partners LP. (NASDAQ:ARLP) is performing as a company requires looking at more than just a years’ earnings. Below, I will run you through a simple sense check to build perspective on how Alliance Resource Partners is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its oil and gas industry peers. Check out our latest analysis for Alliance Resource Partners
How Well Did ARLP Perform?
I look at 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 enables me to analyze many different companies on a more comparable basis, using the latest information. For Alliance Resource Partners, its latest earnings (trailing twelve month) is US$276.37M, which, against last year’s figure, has grown by a relatively soft 9.75%. Since these figures may be relatively short-term, I have determined an annualized five-year value for Alliance Resource Partners’s earnings, which stands at US$260.70M This means on average, Alliance Resource Partners has been able to steadily improve its profits over the past few years as well.
How has it been able to do this? Let’s take a look at whether it is only because of an industry uplift, or if Alliance Resource Partners has experienced some company-specific growth. Over the last couple of years, Alliance Resource Partners top-line expansion has outpaced earnings and the growth rate of expenses. Though this brought about a margin contraction, it has moderated Alliance Resource Partners’s earnings contraction. Inspecting growth from a sector-level, the US oil and gas industry has been growing its average earnings by double-digit 22.25% over the previous year, . This is a turnaround from a volatile drop of -5.78% in the last couple of years. This means that, in the recent industry expansion, Alliance Resource Partners 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. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I suggest you continue to research Alliance Resource Partners to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for ARLP’s future growth? Take a look at our free research report of analyst consensus for ARLP’s outlook.
- Financial Health: Is ARLP’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.
- 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.