Assessing Geospace Technologies Corporation’s (NASDAQ:GEOS) past track record of performance is a valuable exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess GEOS’s recent performance announced on 30 September 2017 and evaluate these figures to its longer term trend and industry movements. Check out our latest analysis for Geospace Technologies
Was GEOS’s weak performance lately a part of a long-term decline?
For the purpose of this commentary, I like to use the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This technique allows me to analyze different stocks on a similar basis, using the most relevant data points. For Geospace Technologies, its latest earnings (trailing twelve month) is -$56.8M, which, in comparison to the prior year’s level, has become more negative. Since these values may be relatively myopic, I have computed an annualized five-year figure for GEOS’s net income, which stands at $9.1M.
We can further assess Geospace Technologies’s loss by looking at what’s going on in the industry as well as within the company. Firstly, I want to quickly look into the line items. Revenue growth over the past couple of years has been negative at -16.42%. The key to profitability here is to make sure the company’s cost growth is well-controlled. Looking at growth from a sector-level, the US energy services industry has been growing, albeit, at a unexciting single-digit rate of 3.17% in the past year, . This is a turnaround from a volatile drop of -13.52% in the previous few years. This shows that any near-term the industry is enduring, it’s hitting Geospace Technologies harder than its 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 forecast what will happen in the future and when. The most insightful step is to examine company-specific issues Geospace Technologies may be facing and whether management guidance has steadily been met in the past. You should continue to research Geospace Technologies to get a more holistic view of the stock by looking at:
1. Financial Health: Is GEOS’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 GEOS 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 GEOS 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 trailing twelve months from 30 September 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.