Does Journey Energy Inc’s (TSE:JOY) Recent Track Record Look Strong?
For long term investors, improvement in profitability and outperformance against the industry can be important characteristics in a stock. In this article, I will take a look at Journey Energy Inc’s (TSX:JOY) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers. View our latest analysis for Journey Energy
How JOY fared against its long-term earnings performance and its industry
To account for any quarterly or half-yearly updates, I 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 technique enables me to assess various companies on a similar basis, using new information. For Journey Energy, its most recent trailing-twelve-month earnings is CA$55.13M, which, against the prior year’s figure, has increased by 31.70%. Given that these values may be somewhat short-term, I’ve calculated an annualized five-year figure for Journey Energy’s earnings, which stands at -CA$36.48M This suggests that, on average, Journey Energy has been able to increasingly raise its profits over the last couple of years as well.
What’s enabled this growth? Well, let’s take a look at if it is merely attributable to an industry uplift, or if Journey Energy has experienced some company-specific growth. In the last couple of years, Journey Energy expanded bottom-line, while its top-line declined, by effectively managing its costs. This resulted in to a margin expansion and profitability over time. Eyeballing growth from a sector-level, the Canadian oil and gas industry has been growing its average earnings by double-digit 11.17% in the prior year, and a flatter -0.67% over the last five years. This means that, in the recent industry expansion, Journey Energy is capable of amplifying this to its advantage.
What does this mean?
Though Journey Energy’s past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I recommend you continue to research Journey Energy to get a more holistic view of the stock by looking at:
1. Financial Health: Is JOY’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 JOY 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 JOY 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.
