When American Electric Technologies Inc (NASDAQ:AETI) released its most recent earnings update (31 December 2017), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were American Electric Technologies’s average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not AETI actually performed well. Below is a quick commentary on how I see AETI has performed. See our latest analysis for American Electric Technologies
How Did AETI’s Recent Performance Stack Up Against Its Past?
I use the ‘latest twelve-month’ data, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This method allows me to examine different stocks in a uniform manner using the most relevant data points. For American Electric Technologies, its most recent earnings (trailing twelve month) is -US$2.58M, which compared to the prior year’s level, has become less negative. Given that these figures may be fairly nearsighted, I have created an annualized five-year value for AETI’s net income, which stands at -US$2.22M. This suggests that, American Electric Technologies has historically performed better than recently, despite the fact that it seems like earnings are now heading back towards a more favorable position once more.
We can further analyze American Electric Technologies’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade American Electric Technologies has seen an annual decline in revenue of -4.04%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Eyeballing growth from a sector-level, the US electrical industry has been growing, albeit, at a subdued single-digit rate of 7.37% over the prior twelve months, and a substantial 13.48% over the past five years. This suggests that, even though American Electric Technologies is presently loss-making, it may have been aided by industry tailwinds, moving earnings into a more favorable position.
What does this mean?
American Electric Technologies’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that incur net loss is always hard to predict what will occur going forward, and when. The most useful step is to assess company-specific issues American Electric Technologies may be facing and whether management guidance has regularly been met in the past. I recommend you continue to research American Electric Technologies to get a better picture of the stock by looking at:
- Financial Health: Is AETI’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.
- Valuation: What is AETI 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 AETI is currently mispriced by the market.
- 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.