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 Genesis Energy SA. (WSE:GNR) useful as an attempt to give more color around how Genesis Energy is currently performing. Check out our latest analysis for Genesis Energy
How Well Did GNR Perform?
I prefer to use data from the most recent 12 months, 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 companies on a similar basis, using the most relevant data points. For Genesis Energy, its latest trailing-twelve-month earnings is -ZŁ14.20K, which compared to last year’s level, has become less negative. Given that these figures may be somewhat myopic, I’ve calculated an annualized five-year figure for GNR’s net income, which stands at -ZŁ5.70M. This suggests that, although net income is negative, it has become less negative over the years.
We can further examine Genesis Energy’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Genesis Energy has seen an annual decline in revenue of -71.46%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Scanning growth from a sector-level, the PL specialty retail industry has been growing its average earnings by double-digit 10.71% over the previous twelve months, and a more subdued 9.53% over the past five. This suggests that, though Genesis Energy is currently loss-making, it may have been aided by industry tailwinds, moving earnings towards to right direction.
What does this mean?
Though Genesis Energy’s past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always difficult to forecast what will occur going forward, and when. The most insightful step is to examine company-specific issues Genesis Energy may be facing and whether management guidance has regularly been met in the past. I recommend you continue to research Genesis Energy to get a better picture of the stock by looking at:
- 1. Financial Health: Is GNR’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. 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 March 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.