Does Gulfsands Petroleum plc’s (LON:GPX) Past Performance Indicate A Stronger Future?
In this article, I will take a look at Gulfsands Petroleum plc’s (AIM:GPX) most recent earnings update (30 June 2017) and compare these latest figures against its performance over the past few years, along with how the rest of GPX’s industry performed. As a long-term investor, I find it useful to analyze the company’s trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time. Check out our latest analysis for Gulfsands Petroleum
Commentary On GPX’s Past Performance
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 method enables me to examine many different companies on a similar basis, using the latest information. For Gulfsands Petroleum, its latest trailing-twelve-month earnings is -US$17.58M, which, against last year’s level, has become less negative. Given that these values may be fairly short-term thinking, I have created an annualized five-year value for GPX’s earnings, which stands at -US$32.15M. This means even though net income is negative, it has become less negative over the years.
We can further examine Gulfsands Petroleum’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Gulfsands Petroleum has seen an annual decline in revenue of -23.07%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Viewing growth from a sector-level, the UK oil and gas industry has been increasing growth, more than doubling average earnings over the previous twelve months, and a flatter 0.11% over the past half a decade. This means any tailwind the industry is profiting from, Gulfsands Petroleum has not been able to reap as much as its average peer.
What does this mean?
Though Gulfsands Petroleum’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always hard to envisage what will occur going forward, and when. The most useful step is to assess company-specific issues Gulfsands Petroleum may be facing and whether management guidance has steadily been met in the past. I recommend you continue to research Gulfsands Petroleum to get a more holistic view of the stock by looking at:
1. Financial Health: Is GPX’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 GPX 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 GPX 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 June 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.
