For investors with a long-term horizon, assessing earnings trend over time and against industry benchmarks is more valuable than looking at a single earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on Nautilus Marine Services PLC (AIM:NAUT) useful as an attempt to give more color around how Nautilus Marine Services is currently performing. See our latest analysis for Nautilus Marine Services
Was NAUT weak performance lately part of a long-term decline?
To account for any quarterly or half-yearly updates, 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 allows me to analyze different companies on a similar basis, using the most relevant data points. For Nautilus Marine Services, its latest earnings (trailing twelve month) is -US$8.95M, which, relative to the previous year’s figure, has become more negative. Given that these values may be relatively short-term thinking, I’ve determined an annualized five-year figure for Nautilus Marine Services’s net income, which stands at -US$9.25M. This means that, despite the fact that net income is negative, it has become less negative over the years.
We can further assess Nautilus Marine Services’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Nautilus Marine Services has seen an annual decline in revenue of -51.86%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Looking at growth from a sector-level, the UK oil and gas industry has been growing its average earnings by double-digit 36.14% over the previous year, and a flatter 1.59% over the past five. This means whatever uplift the industry is benefiting from, Nautilus Marine Services has not been able to realize the gains unlike its average peer.
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 insightful step is to examine company-specific issues Nautilus Marine Services may be facing and whether management guidance has consistently been met in the past. You should continue to research Nautilus Marine Services to get a more holistic view of the stock by looking at:
- 1. Financial Health: Is NAUT’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 NAUT 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 NAUT 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 31 December 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.