Did AusTex Oil Limited’s (ASX:AOK) Earnings Growth Outperform The Industry?
For long-term investors, assessing earnings trend over time and against industry benchmarks is more beneficial than examining a single earnings announcement at a point in time. Investors may find my commentary, albeit very high-level and brief, on AusTex Oil Limited (ASX:AOK) useful as an attempt to give more color around how AusTex Oil is currently performing. See our latest analysis for AusTex Oil
How Well Did AOK Perform?
For the purpose of this commentary, I like 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 enables me to assess various companies on a more comparable basis, using the latest information. For AusTex Oil, its latest trailing-twelve-month earnings is -US$13.01M, which, in comparison to the prior year’s figure, has become less negative. Since these values may be relatively short-term, I have created an annualized five-year figure for AOK’s earnings, which stands at -US$8.71M. This suggests that, AusTex Oil has historically performed better than recently, although it seems like earnings are now heading back towards to right direction again.
We can further assess AusTex Oil’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years AusTex Oil’s top-line has risen by a mere 5.28%, on average. The company’s inability to breakeven has been aided by the relatively flat top-line in the past. Looking at growth from a sector-level, the Australian oil and gas industry has been growing growth, more than doubling average earnings over the past year, and a solid 11.17% over the past five. This means any tailwind the industry is deriving benefit from, AusTex Oil has not been able to realize the gains unlike its industry peers.
What does this mean?
AusTex Oil’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 happen in the future and when. The most insightful step is to examine company-specific issues AusTex Oil may be facing and whether management guidance has dependably been met in the past. I suggest you continue to research AusTex Oil to get a more holistic view of the stock by looking at:
Financial Health: Is AOK’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.
Valuation: What is AOK 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 AOK is currently mispriced by the market.
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 June 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.
