After reading Adams Resources & Energy Inc’s (AMEX:AE) most recent earnings announcement (30 September 2017), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether Adams Resources & Energy’s performance has been impacted by industry movements. In this article I briefly touch on my key findings. Check out our latest analysis for Adams Resources & Energy
Commentary On AE’s Past Performance
For the most up-to-date info, I use data from the most recent 12 months, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This blend enables me to analyze different stocks in a uniform manner using the most relevant data points. For Adams Resources & Energy, the most recent twelve-month earnings -$4.3M, which, relative to last year’s level, has become less negative. Since these values are relatively short-term thinking, I have determined an annualized five-year figure for Adams Resources & Energy’s net income, which stands at $12.1M.
We can further examine Adams Resources & Energy’s loss by researching what’s going on in the industry along with within the company. First, I want to briefly look into the line items. Revenue growth over last few years has been negative at -9.60%. The key to profitability here is to make sure the company’s cost growth is well-controlled. Viewing growth from a sector-level, the US oil, gas and consumable fuels industry has been growing its average earnings by double-digit 13.67% in the previous twelve months, and a flatter -1.07% over the past couple of years. This means despite the fact that Adams Resources & Energy is presently loss-making, it may have only just benefited from the recent industry expansion, moving earnings towards to right direction.
What does this mean?
Adams Resources & 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 hard to forecast what will happen in the future and when. The most useful step is to examine company-specific issues Adams Resources & Energy may be facing and whether management guidance has dependably been met in the past. I suggest you continue to research Adams Resources & Energy to get a more holistic view of the stock by looking at:
1. Financial Health: Is AE’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 AE 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 AE 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 last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. 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.