For investors with a long-term horizon, examining earnings trend over time and against industry peers is more insightful than looking at an earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on Yuma Energy Inc (AMEX:YUMA) useful as an attempt to give more color around how Yuma Energy is currently performing. Check out our latest analysis for Yuma Energy
Were YUMA’s earnings stronger than its past performances and the industry?
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 examine different stocks on a more comparable basis, using new information. For Yuma Energy, its most recent trailing-twelve-month earnings is -US$6.81M, which, in comparison to the prior year’s level, has become less negative. Given that these values are relatively myopic, I’ve determined an annualized five-year figure for YUMA’s earnings, which stands at -US$40.30M. This means even though net income is negative, it has become less negative over the years.
We can further evaluate Yuma Energy’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Yuma Energy has seen an annual decline in revenue of -28.02%, 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 24.90% over the prior twelve months, . This is a turnaround from a volatile drop of -8.32% in the past few years. This shows that, despite the fact that Yuma Energy is currently running a loss, it may have only just been aided by the recent industry expansion, moving earnings into a more favorable position.
What does this mean?
Though Yuma Energy’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always difficult to predict what will happen in the future and when. The most valuable step is to examine company-specific issues Yuma Energy may be facing and whether management guidance has regularly been met in the past. I recommend you continue to research Yuma Energy to get a more holistic view of the stock by looking at:
- 1. Financial Health: Is YUMA’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 YUMA 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 YUMA 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 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.