Was Eko Export SA.’s (WSE:EEX) Earnings Decline Part Of A Broader Industry Downturn?
Understanding Eko Export SA.’s (WSE:EEX) performance as a company requires examining more than earnings from one point in time. Today I will take you through a basic sense check to gain perspective on how Eko Export is doing by evaluating its latest earnings with its longer term trend as well as its industry peers’ performance over the same period. See our latest analysis for Eko Export
Despite a decline, did EEX underperform the long-term trend and the industry?
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 method allows me to examine different stocks on a similar basis, using new information. For Eko Export, its latest trailing-twelve-month earnings is -ZŁ1.73M, which, against the previous year’s figure, has become more negative. Given that these figures are relatively short-term, I’ve created an annualized five-year figure for Eko Export’s earnings, which stands at ZŁ5.27M.
We can further examine Eko Export’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Eko Export’s revenue growth has been somewhat subdued, with an annual growth rate of 0.19%, on average. The company’s inability to breakeven has been aided by the relatively flat top-line in the past. Inspecting growth from a sector-level, the PL chemicals industry has been enduring some headwinds over the prior year, leading to an average earnings drop of -10.90%. This is a major change, given that the industry has constantly been delivering a a notable growth of 10.74% in the past half a decade. This means whatever recent headwind the industry is enduring, it’s hitting Eko Export harder than its peers.
What does this mean?
Though Eko Export’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always difficult to forecast what will occur going forward, and when. The most useful step is to examine company-specific issues Eko Export may be facing and whether management guidance has steadily been met in the past. I recommend you continue to research Eko Export to get a more holistic view of the stock by looking at:
1. Financial Health: Is EEX’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.
