Was Coro Energy plc’s (LON:CORO) Earnings Decline Part Of A Broader Industry Downturn?
Today I will examine Coro Energy plc’s (AIM:CORO) latest earnings update (31 December 2017) and compare these figures against its performance over the past couple of years, in addition to how the rest of CORO’s industry performed. As a long-term investor, I find it useful to analyze the company’s trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time. Check out our latest analysis for Coro Energy
Did CORO perform worse than its track record and industry?
To account for any quarterly or half-yearly updates, I use the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This technique allows me to examine various companies on a similar basis, using the most relevant data points. For Coro Energy, its most recent trailing-twelve-month earnings is -€7.03M, which compared to the previous year’s level, has become more negative. Since these values may be somewhat nearsighted, I’ve determined an annualized five-year value for Coro Energy’s net income, which stands at -€5.00M. This doesn’t look much better, as earnings seem to have gradually been getting more and more negative over time.
We can further analyze Coro Energy’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Coro Energy has seen an annual decline in revenue of -49.15%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Inspecting growth from a sector-level, the UK oil and gas industry has been growing its average earnings by double-digit 41.00% in the prior twelve months, and a flatter 1.59% over the past five. This means whatever uplift the industry is deriving benefit from, Coro Energy has not been able to reap as much as its average peer.
What does this mean?
Coro Energy’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. With companies that are currently loss-making, it is always difficult to envisage what will occur going forward, and when. The most valuable step is to assess company-specific issues Coro Energy may be facing and whether management guidance has consistently been met in the past. I suggest you continue to research Coro Energy to get a more holistic view of the stock by looking at:
1. Financial Health: Is CORO’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 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.
