Today I will take a look at Western Energy Services Corp’s (TSX:WRG) most recent earnings update (30 September 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 WRG’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. Check out our latest analysis for Western Energy Services
How Well Did WRG Perform?
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 examine various companies in a uniform manner using the most relevant data points. For Western Energy Services, the most recent bottom-line -CA$47.1M, which, in comparison to the prior year’s figure, has become less negative. Since these values are somewhat short-term thinking, I’ve determined an annualized five-year value for WRG’s net income, which stands at -CA$3.3M. This means Western Energy Services has historically performed better than recently, though it seems like earnings are now heading back towards a more favorable position once more.
We can further examine Western Energy Services’s loss by researching what’s going on in the industry on top of within the company. First, I want to quickly look into the line items. Revenue growth over the last couple of years has been fairly subdued, remaining flat on average at 0.04%. Since top-line growth is also pretty stale the key to profitability moving forward would be managing cost growth rates. Eyeballing growth from a sector-level, the Canadian energy services industry has been enduring some headwinds over the previous couple of years, leading to an average earnings drop of -21.54% in the most recent year. This means that whatever recent headwind the industry is enduring, the impact on Western Energy Services has been softer relative to its peers.
What does this mean?
Western Energy Services’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that incur net loss is always difficult to forecast what will happen in the future and when. The most useful step is to assess company-specific issues Western Energy Services may be facing and whether management guidance has steadily been met in the past. I recommend you continue to research Western Energy Services to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for WRG’s future growth? Take a look at our free research report of analyst consensus for WRG’s outlook.
2. Financial Health: Is WRG’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.