Does Boart Longyear Limited’s (ASX:BLY) Earnings Growth Make It An Outperformer?
Improvement in profitability and outperformance against the industry can be important characteristics in a stock for some investors. Below, I will assess Boart Longyear Limited’s (ASX:BLY) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers. Check out our latest analysis for Boart Longyear
Could BLY beat the long-term trend and outperform its industry?
For the purpose of this commentary, I like to use the ‘latest twelve-month’ data, 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 enables me to examine various companies on a similar basis, using the latest information. For Boart Longyear, its most recent trailing-twelve-month earnings is -US$150.04M, which compared to the prior year’s level, has become less negative. Since these values may be somewhat nearsighted, I have created an annualized five-year value for Boart Longyear’s earnings, which stands at -US$181.45M. This means that, though net income is negative, it has become less negative over the years.
We can further assess Boart Longyear’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Boart Longyear has seen an annual decline in revenue of -20.05%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Looking at growth from a sector-level, the Australian construction industry has been growing, albeit, at a muted single-digit rate of 9.98% over the past twelve months, . This is a change from a volatile drop of -7.80% in the previous couple of years. This means whatever uplift the industry is benefiting from, Boart Longyear has not been able to reap as much as its industry peers.
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 hard to predict what will happen in the future and when. The most valuable step is to examine company-specific issues Boart Longyear may be facing and whether management guidance has consistently been met in the past. I recommend you continue to research Boart Longyear to get a better picture of the stock by looking at the areas below. Just a heads up – to access some parts of the Simply Wall St research tool you might be asked to create a free account, but it takes just one click and the information they provide is definitely worth it in my opinion.
1. Financial Health: Is BLY’s operations financially sustainable? Balance sheets can be hard to analyze, which is why Simply Wall St does it for you. Check out important financial health checks here.
2. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore a 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.
