Measuring Gevo Inc’s (NASDAQ:GEVO) 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 GEVO’s recent performance announced on 30 September 2017 and compare these figures to its historical trend and industry movements. Check out our latest analysis for Gevo
Could GEVO beat the long-term trend and outperform its industry?
For the most up-to-date info, I use the ‘latest twelve-month’ data, 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 enables me to analyze various companies on a similar basis, using the most relevant data points. Gevo’s latest earnings -$23M, which, against the previous year’s level, has become less negative. Since these figures may be fairly short-term thinking, I’ve estimated an annualized five-year figure for GEVO’s net income, which stands at -$47M. This suggests that, while net income is negative, it has become less negative over the years.
Additionally, we can assess Gevo’s loss by looking at what’s going on in the industry along with within the company. First, I want to quickly look into the line items. Revenue growth over last few years has been negative at -8.07%. 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% over the prior year, . This is a change from a volatile drop of -10.80% in the last few years. This means that whatever near-term headwind the industry is enduring, Gevo is less exposed compared to its peers.
What does this mean?
Gevo’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 hard to predict what will occur going forward, and when. The most valuable step is to examine company-specific issues Gevo may be facing and whether management guidance has regularly been met in the past. I recommend you continue to research Gevo to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for GEVO’s future growth? Take a look at our free research report of analyst consensus for GEVO’s outlook.
2. Financial Health: Is GEVO’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.