Are Earnings Prospects Improving For Loss-Making Clearford Water Systems Inc’s (CVE:CLI)?
Measuring Clearford Water Systems Inc’s (TSXV:CLI) track record of past performance is an insightful exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess CLI’s recent performance announced on 30 September 2017 and compare these figures to its historical trend and industry movements. View our latest analysis for Clearford Water Systems
Did CLI’s recent earnings growth beat the long-term trend and the industry?
I like 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 blend enables me to analyze many different companies on a more comparable basis, using the latest information. For Clearford Water Systems, its most recent trailing-twelve-month earnings is -CA$5.40M, which, in comparison to the previous year’s figure, has become less negative. Given that these figures may be relatively nearsighted, I have computed an annualized five-year figure for Clearford Water Systems’s earnings, which stands at -CA$4.92M. This shows that, Clearford Water Systems 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 assess Clearford Water Systems’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Clearford Water Systems’s top-line has risen by 39.26% on average, signalling that the company is in a high-growth phase with expenses shooting ahead of revenues, leading to annual losses. Looking at growth from a sector-level, the Canadian water utilities industry has been growing, albeit, at a muted single-digit rate of 7.58% over the previous twelve months, and 6.62% over the previous five years. This suggests that, though Clearford Water Systems is presently running a loss, it may have been aided by industry tailwinds, moving earnings in the right direction.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that incur net loss is always hard to envisage what will occur going forward, and when. The most useful step is to assess company-specific issues Clearford Water Systems may be facing and whether management guidance has dependably been met in the past. I recommend you continue to research Clearford Water Systems to get a better picture of the stock by looking at:
1. Financial Health: Is CLI’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. 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 30 September 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.
