Does Jericho Oil Corporation’s (TSXV:JCO) 41.4% Earnings Growth Make It An Outperformer?
Examining how Jericho Oil Corporation (TSXV:JCO) 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 Jericho Oil is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its oil, gas and consumable fuels industry peers. Check out our latest analysis for Jericho Oil
Could JCO beat the long-term trend and outperform its industry?
I use data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This method allows me to examine many different companies on a more comparable basis, using new information. For Jericho Oil, the latest twelve-month earnings -CA$2.3M, which, against last year’s figure, has become less negative. Given that these values may be somewhat nearsighted, I’ve created an annualized five-year value for Jericho Oil’s earnings, which stands at -CA$0.7M. This shows that, Jericho Oil has historically performed better than recently, even though it seems like earnings are now heading back towards to right direction again.
Additionally, we can examine Jericho Oil’s loss by researching what has been happening in the industry along with within the company. Initially, I want to quickly look into the line items. Revenue growth over last couple of years has been negative at -40.60%. The key to profitability here is to make sure the company’s cost growth is well-controlled. Inspecting growth from a sector-level, the Canadian oil, gas and consumable fuels industry has been growing its average earnings by double-digit 11.17% over the past twelve months, and a flatter 0.38% over the past couple of years. This suggests that, though Jericho Oil is currently 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. 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 assess company-specific issues Jericho Oil may be facing and whether management guidance has consistently been met in the past. I suggest you continue to research Jericho Oil to get a more holistic view of the stock by looking at:
1. Financial Health: Is JCO’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.
