In this commentary, I will examine Aemetis Inc’s (NASDAQ:AMTX) latest earnings update (30 September 2017) and compare these figures against its performance over the past couple of years, as well as how the rest of the oil and gas industry performed. As an investor, I find it beneficial to assess AMTX’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time. View our latest analysis for Aemetis
Commentary On AMTX’s Past Performance
I prefer to 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 analyze many different companies on a more comparable basis, using the latest information. For Aemetis, its latest earnings (trailing twelve month) is -$24.2M, which, in comparison to the previous year’s level, has become more negative. Since these values are somewhat short-term, I’ve calculated an annualized five-year figure for AMTX’s earnings, which stands at -$14.4M. This doesn’t seem to paint a better picture, as earnings seem to have steadily been getting more and more negative over time.
We can further assess Aemetis’s loss by looking at what’s going on in the industry as well as within the company. First, I want to briefly look into the line items. Revenue growth over the last couple of years has increased by a mere 3.65%. Since top-line growth is also pretty stale the key to profitability going forward would be controlling cost growth rates. Inspecting growth from a sector-level, the US oil and gas industry has been growing its average earnings by double-digit 18.37% in the past year, . This is a change from a volatile drop of -7.81% in the past few years. This shows that whatever uplift the industry is enjoying, Aemetis has not been able to gain as much as its average peer.
What does this mean?
Aemetis’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that incur net loss is always difficult to envisage what will happen in the future and when. The most useful step is to assess company-specific issues Aemetis may be facing and whether management guidance has steadily been met in the past. You should continue to research Aemetis to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for AMTX’s future growth? Take a look at our free research report of analyst consensus for AMTX’s outlook.
2. Financial Health: Is AMTX’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 30 September 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.