Does Nordic American Offshore Ltd’s (NYSE:NAO) Past Performance Indicate A Stronger Future?
Today I will take a look at Nordic American Offshore Ltd’s (NYSE:NAO) most recent earnings update (31 December 2017) and compare these latest figures against its performance over the past few years, as well as how the rest of the energy services industry performed. As an investor, I find it beneficial to assess NAO’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time. See our latest analysis for Nordic American Offshore
Did NAO’s recent earnings growth beat the long-term trend and the industry?
I look at the ‘latest twelve-month’ data, 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 enables me to analyze many different companies in a uniform manner using new information. For Nordic American Offshore, its latest earnings (trailing twelve month) is -US$29.33M, which compared to the previous year’s figure, has become less negative. Since these figures are somewhat nearsighted, I’ve calculated an annualized five-year value for NAO’s earnings, which stands at -US$16.77M. This suggests that, Nordic American Offshore has historically performed better than recently, while it seems like earnings are now heading back towards a more favorable position once more.
We can further analyze Nordic American Offshore’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Nordic American Offshore has seen an annual decline in revenue of -21.60%, 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 US energy services industry has been growing its average earnings by double-digit 22.95% over the prior twelve months, . This is a change from a volatile drop of -22.57% in the past couple of years. This means that any tailwind the industry is profiting from, Nordic American Offshore has not been able to gain as much as its average peer.
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 difficult to envisage what will happen in the future and when. The most insightful step is to assess company-specific issues Nordic American Offshore may be facing and whether management guidance has regularly been met in the past. I recommend you continue to research Nordic American Offshore to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for NAO’s future growth? Take a look at our free research report of analyst consensus for NAO’s outlook.
Financial Health: Is NAO’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.
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.
