Are Earnings Prospects Improving For Loss-Making Chinook Energy Inc’s (TSE:CKE)?
Analyzing Chinook Energy Inc’s (TSX:CKE) track record of past performance is a valuable exercise for investors. It enables us to reflect on whether or not the company has met expectations, which is a powerful signal for future performance. Today I will assess CKE’s recent performance announced on 31 December 2017 and compare these figures to its long-term trend and industry movements. See our latest analysis for Chinook Energy
How Well Did CKE Perform?
I prefer to use data from the most recent 12 months, 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 technique allows me to analyze many different companies on a similar basis, using the latest information. For Chinook Energy, its most recent trailing-twelve-month earnings is -CA$16.91M, which, in comparison to the previous year’s figure, has become less negative. Since these values may be somewhat short-term thinking, I have computed an annualized five-year figure for Chinook Energy’s net income, which stands at -CA$51.44M. This shows that, although net income is negative, it has become less negative over the years.
We can further evaluate Chinook Energy’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Chinook Energy has seen an annual decline in revenue of -26.59%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Viewing growth from a sector-level, the Canadian oil and gas industry has been relatively flat in terms of earnings growth over the last couple of years. This means that while Chinook Energy is presently loss-making, any recent headwind the industry is facing, the impact on Chinook Energy has been softer relative to its peers.
What does this mean?
Chinook 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 envisage what will occur going forward, and when. The most useful step is to assess company-specific issues Chinook Energy may be facing and whether management guidance has regularly been met in the past. I recommend you continue to research Chinook Energy to get a better picture of the stock by looking at:
1. Financial Health: Is CKE’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 CKE 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 CKE 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.