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Should You Be Content With PEDEVCO Corp’s (NYSEMKT:PED) Earnings Growth?

Rowena Gregory

For long term investors, improvement in profitability and outperformance against the industry can be important characteristics in a stock. In this article, I will take a look at PEDEVCO Corp’s (AMEX:PED) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers. See our latest analysis for PEDEVCO

Were PED’s earnings stronger than its past performances and the industry?

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 method allows me to assess many different companies on a similar basis, using the latest information. For PEDEVCO, its latest trailing-twelve-month earnings is -US$19.18M, which, relative to the previous year’s level, has become less negative. Given that these figures are relatively myopic, I’ve created an annualized five-year figure for PEDEVCO’s earnings, which stands at -US$18.02M. This means that, PEDEVCO has historically performed better than recently, even though it seems like earnings are now heading back towards a more favorable position once more.

AMEX:PED Income Statement Mar 22nd 18
AMEX:PED Income Statement Mar 22nd 18

We can further assess PEDEVCO’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years PEDEVCO’s top-line has increased by 28.79% on average, indicating that the company is in a high-growth period with expenses shooting ahead of revenues, leading to annual losses. Viewing growth from a sector-level, the US oil and gas industry has been growing its average earnings by double-digit 26.40% over the past twelve months, . This is a turnaround from a volatile drop of -8.77% in the previous few years. This shows that whatever tailwind the industry is enjoying, PEDEVCO has not been able to gain as much as its average peer.

What does this mean?

While past data is useful, it doesn’t tell the whole story. Companies that incur net loss is always hard to predict what will happen in the future and when. The most useful step is to assess company-specific issues PEDEVCO may be facing and whether management guidance has regularly been met in the past. I suggest you continue to research PEDEVCO to get a better picture of the stock by looking at:

  • 1. Financial Health: Is PED’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. 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.