After looking at Stone Energy Corporation’s (NYSE:SGY) latest earnings update (30 September 2017), I found it helpful to revisit the company’s performance in the past couple of years and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is an important aspect. In this article I briefly touch on my key findings. Check out our latest analysis for Stone Energy
How Did SGY’s Recent Performance Stack Up Against Its Past?
I look at 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 enables me to examine different companies in a uniform manner using the latest information. For Stone Energy, the latest twelve-month earnings -$381M, which compared to last year’s level, has become less negative. Since these values are somewhat nearsighted, I’ve determined an annualized five-year figure for Stone Energy’s net income, which stands at -$223M. This means Stone Energy has historically performed better than recently, while it seems like earnings are now heading back towards to right direction again.
We can further examine Stone Energy’s loss by researching what’s going on in the industry along with within the company. Initially, I want to quickly look into the line items. Revenue growth over past couple of years has been negative at -11.27%. The key to profitability here is to make sure the company’s cost growth is well-controlled. Eyeballing 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% in the prior year, . This is a turnaround from a volatile drop of -10.80% in the previous couple of years. This shows that any recent headwind the industry is experiencing, the impact on Stone Energy has been softer relative to its peers.
What does this mean?
Stone Energy’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. With companies that are currently loss-making, it is always difficult to predict what will occur going forward, and when. The most insightful step is to examine company-specific issues Stone Energy may be facing and whether management guidance has regularly been met in the past. I recommend you continue to research Stone Energy to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for SGY’s future growth? Take a look at our free research report of analyst consensus for SGY’s outlook.
2. Financial Health: Is SGY’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.
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.