Did QEP Resources Inc’s (NYSE:QEP) Recent Earnings Growth Beat The Trend?
Assessing QEP Resources Inc’s (NYSE:QEP) 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 QEP’s latest performance announced on 30 September 2017 and evaluate these figures to its historical trend and industry movements. Check out our latest analysis for QEP Resources
Could QEP beat the long-term trend and outperform its industry?
For the most up-to-date info, I 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 analyze various companies in a uniform manner using new information. For QEP Resources, its most recent trailing-twelve-month earnings is -US$14.30M, which compared to the previous year’s level, has become less negative. Given that these figures are fairly short-term thinking, I have determined an annualized five-year figure for QEP’s net income, which stands at -US$178.77M. This suggests that, despite the fact that net income is negative, it has become less negative over the years.
We can further assess QEP Resources’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade QEP Resources has seen an annual decline in revenue of -8.55%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Viewing growth from a sector-level, the US oil and gas industry has been growing its average earnings by double-digit 18.57% in the prior year, . This is a turnaround from a volatile drop of -8.10% in the previous few years. This suggests that, even though QEP Resources is currently unprofitable, it may have only just gained from the recent industry expansion, moving earnings in the right direction.
What does this mean?
While past data is useful, it doesn’t tell the whole story. With companies that are currently loss-making, it is always difficult to forecast what will occur going forward, and when. The most valuable step is to assess company-specific issues QEP Resources may be facing and whether management guidance has consistently been met in the past. I recommend you continue to research QEP Resources to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for QEP’s future growth? Take a look at our free research report of analyst consensus for QEP’s outlook.
2. Financial Health: Is QEP’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.
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.
