After reading Camber Energy Inc’s (AMEX:CEI) latest earnings update (30 September 2017), I found it beneficial to look back at how the company has performed in the past and compare this against the most recent numbers. As a long-term investor I tend to pay attention to earnings trend, rather than a single number at one point in time. I also like to compare against an industry benchmark to understand whether CEI has outperformed, or whether it is simply riding an industry wave. Below is a brief commentary on my key takeaways. See our latest analysis for Camber Energy
Could CEI beat the long-term trend and outperform its industry?
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 technique enables me to examine different companies on a more comparable basis, using new information. For Camber Energy, its latest trailing-twelve-month earnings is -$46.2M, which, in comparison to last year’s figure, has become less negative. Given that these figures are fairly myopic, I have computed an annualized five-year figure for Camber Energy’s net income, which stands at -$61.7M. This means that, while net income is negative, it has become less negative over the years.
Additionally, we can analyze Camber Energy’s loss by looking at what has been happening in the industry as well as within the company. First, I want to quickly look into the line items. Revenue growth over the last few years has more than doubled, signalling that Camber Energy is in a high-growth phase with expenses shooting ahead of high top-line growth rates, leading to yearly losses. Looking at growth from a sector-level, the US oil and gas industry has been growing its average earnings by double-digit 18.37% in the previous twelve months, . This is a change from a volatile drop of -7.81% in the previous couple of years. This means although Camber Energy is currently running a loss, it may have only just been aided by the recent industry expansion, moving earnings towards to right direction.
What does this mean?
Camber 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 predict what will happen in the future and when. The most valuable step is to examine company-specific issues Camber Energy may be facing and whether management guidance has consistently been met in the past. I recommend you continue to research Camber Energy to get a better picture of the stock by looking at:
1. Financial Health: Is CEI’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 CEI 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 CEI 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 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.