Examining Permian Basin Royalty Trust’s (NYSE:PBT) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess PBT’s latest performance announced on 30 September 2017 and compare these figures to its longer term trend and industry movements. See our latest analysis for PBT
Could PBT beat the long-term trend and outperform its industry?
I prefer to use data from the most recent 12 months, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This blend enables me to assess different stocks on a more comparable basis, using new information. For Permian Basin Royalty Trust, the latest earnings is $29M, which compared to the prior year’s figure, has risen by a non-trivial 93.80%. Since these figures are somewhat nearsighted, I have created an annualized five-year value for PBT’s earnings, which stands at $42M. This means though earnings growth from last year was positive, in the long run, Permian Basin Royalty Trust’s earnings have been waning on average.
Why could this be happening? Well, let’s take a look at what’s transpiring with margins and if the whole industry is feeling the heat. Although revenue growth over the last few years, has been negative, earnings growth has been declining by even more, suggesting that Permian Basin Royalty Trust has been increasing its expenses. This hurts margins and earnings, and is not a sustainable practice. Inspecting growth from a sector-level, the US oil, gas and consumable fuels industry has been growing, albeit, at a subdued single-digit rate of 3.71% over the prior year, . This is a change from a volatile drop of -10.80% in the past couple of years. This means whatever recent headwind the industry is enduring, Permian Basin Royalty Trust is relatively better-cushioned than its peers.
What does this mean?
Though Permian Basin Royalty Trust’s past data is helpful, it is only one aspect of my investment thesis. Recent positive growth doesn’t necessarily mean it’s onwards and upwards for the company.
I recommend you continue to research Permian Basin Royalty Trust to get a better picture of the stock by looking at:
1. Financial Health: Is PBT’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 PBT 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 PBT 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 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.