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Assessing BP Prudhoe Bay Royalty Trust’s (NYSE:BPT) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess BPT’s recent performance announced on 31 December 2017 and evaluate these figures to its long-term trend and industry movements. View our latest analysis for BP Prudhoe Bay Royalty Trust
How Did BPT’s Recent Performance Stack Up Against Its Past?
For the most up-to-date info, I 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 method allows me to examine many different companies in a uniform manner using the most relevant data points. For BP Prudhoe Bay Royalty Trust, its latest earnings (trailing twelve month) is US$77.04M, which, relative to last year’s level, has jumped by a significant 76.61%. Given that these values may be somewhat myopic, I have determined an annualized five-year value for BPT’s net income, which stands at US$158.18M This means although earnings growth from last year was positive, over time, BP Prudhoe Bay Royalty Trust’s earnings have been waning on average.
Why could this be happening? Well, let’s take a look at what’s transpiring with margins and if the rest of the industry is experiencing the hit as well. Although revenue growth in the last few years, has been negative, earnings growth has been falling by even more, suggesting that BP Prudhoe Bay Royalty Trust has been ramping up its expenses. This harms margins and earnings, and is not a sustainable practice. Viewing growth from a sector-level, the US oil and gas industry has been growing its average earnings by double-digit 24.23% over the past twelve months, . This is a turnaround from a volatile drop of -8.09% in the past couple of years. This means in the recent industry expansion, BP Prudhoe Bay Royalty Trust is capable of leveraging this to its advantage.
What does this mean?
Though BP Prudhoe Bay Royalty Trust’s past data is helpful, it is only one aspect of my investment thesis. Recent positive growth isn’t always indicative of a continued optimistic outlook. There could be factors that are affecting the industry as a whole, thus the high industry growth rate over the same time frame. I recommend you continue to research BP Prudhoe Bay Royalty Trust to get a more holistic view of the stock by looking at:
1. Financial Health: Is BPT’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. Valuation: What is BPT worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether BPT is currently mispriced by the market.
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.