Does Jatenergy Limited’s (ASX:JAT) Earnings Growth Make It An Outperformer?
Examining how Jatenergy Limited (ASX:JAT) is performing as a company requires looking at more than just a years’ earnings. Below, I will run you through a simple sense check to build perspective on how Jatenergy is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its distributors industry peers. See our latest analysis for Jatenergy
How Did JAT’s Recent Performance Stack Up Against Its Past?
I like to use data from the most recent 12 months, 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 method enables me to examine different stocks on a similar basis, using new information. For Jatenergy, its latest earnings is -A$0.4M, which, against the prior year’s figure, has become less negative. Since these figures are somewhat myopic, I have estimated an annualized five-year figure for Jatenergy’s earnings, which stands at -A$2.6M. This means even though net income is negative, it has become less negative over the years.
Additionally, we can analyze Jatenergy’s loss by looking at what’s going on in the industry as well as within the company. Firstly, I want to briefly look into the line items. Revenue growth over the past few years has grown by 62.38%, implying that Jatenergy is in a high-growth phase with expenses shooting ahead of elevated top-line growth rates, leading to yearly losses. Inspecting growth from a sector-level, the Australian distributors industry has been growing its average earnings by double-digit 39.83% in the previous twelve months, and a less exciting 8.21% over the previous few years. This shows that, even though Jatenergy is presently running a loss, it may have been aided by industry tailwinds, moving earnings in the right direction.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that incur net loss is always hard to forecast what will occur going forward, and when. The most useful step is to assess company-specific issues Jatenergy may be facing and whether management guidance has steadily been met in the past. I suggest you continue to research Jatenergy to get a better picture of the stock by looking at:
1. Financial Health: Is JAT’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 last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. 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.
