Assessing MagneGas Corporation’s (NASDAQ:MNGA) past track record of performance is a useful exercise for investors. It allows us to understand whether the company has met or exceed expectations, which is a great indicator for future performance. Below, I assess MNGA’s latest performance announced on 31 March 2018 and evaluate these figures to its historical trend and industry movements. See our latest analysis for MagneGas
How Did MNGA’s Recent Performance Stack Up Against Its Past?
MNGA is loss-making, with the most recent trailing twelve-month earnings of -US$18.17m (from 31 March 2018), which compared to last year has become more negative. Furthermore, the company’s loss seem to be growing over time, with the five-year earnings average of -US$8.99m. Each year, for the past five years MNGA has seen an annual increase in operating expense growth, outpacing revenue growth of 33.89%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Looking at growth from a sector-level, the US chemicals industry has been growing its average earnings by double-digit 16.49% in the previous year, and a more subdued 6.32% over the past five. This means that whatever uplift the industry is deriving benefit from, MagneGas has not been able to realize the gains unlike its average peer.
Since MagneGas is loss-making, with operating expenses (opex) growing year-on-year at 19.02%, it may need to raise more cash over the next year. It currently has US$2.10m in cash and short-term investments, however, opex (SG&A and one-year R&D) reached US$12.28m in the latest twelve months. Even though this is analysis is fairly basic, and MagneGas still can cut its overhead in the near future, or open a new line of credit instead of issuing new equity shares, the analysis still gives us an idea of the company’s timeline and when things will have to start changing, since its current operation is unsustainable.
What does this mean?
Though MagneGas’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always difficult to predict what will happen in the future and when. The most useful step is to examine company-specific issues MagneGas may be facing and whether management guidance has dependably been met in the past. I recommend you continue to research MagneGas to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for MNGA’s future growth? Take a look at our free research report of analyst consensus for MNGA’s outlook.
- Financial Health: Is MNGA’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 March 2018. 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.