Measuring Aegion Corporation's (NasdaqGS:AEGN) track record of past performance is a useful exercise for investors. It enables us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess AEGN's recent performance announced on 30 September 2019 and weigh these figures against its long-term trend and industry movements.
Did AEGN perform worse than its track record and industry?
AEGN is loss-making, with the most recent trailing twelve-month earnings of -US$8.8m (from 30 September 2019), which compared to last year has become more negative. Over the past five years, its average earnings level was positive at US$725k, which meant its expenses has only exceeded revenues recently, pulling AEGN into the loss-making zone.
Each year, for the past five years AEGN has seen an annual decline in revenue of -0.4%, on average. This adverse movement is a driver of the company's inability to reach breakeven.
Scanning growth from a sector-level, the US construction industry has been growing, albeit, at a subdued single-digit rate of 4.6% in the past year, and a substantial 14% over the past five years. This growth is a median of profitable companies of 21 Construction companies in US including Argan, Goldfield and Dycom Industries. This means that any recent headwind the industry is facing, it’s hitting Aegion harder than its peers.
Given that Aegion is loss-making, with operating expenses (opex) growing year-on-year at 0.2%, it may need to raise more cash over the next year. It currently has US$52m in cash and short-term investments, however, opex (SG&A and one-year R&D) reachedUS$195m in the latest twelve months. Although this is a relatively simplistic calculation, and Aegion may reduce its costs or open a new line of credit instead of issuing new equity shares, the outcome of this analysis still helps us understand how sustainable the Aegion’s operation is, and when things may have to change.
What does this mean?
Aegion'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 occur going forward, and when. The most insightful step is to examine company-specific issues Aegion may be facing and whether management guidance has steadily been met in the past. I suggest you continue to research Aegion to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for AEGN’s future growth? Take a look at our free research report of analyst consensus for AEGN’s outlook.
- Financial Health: Are AEGN’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.
- 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 2019. This may not be consistent with full year annual report figures.
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