Understanding Gulfsands Petroleum plc’s (AIM:GPX) 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 Gulfsands Petroleum 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 GPX
Did GPX’s recent EPS Growth beat the long-term trend and the industry?
I look at 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 method enables me to analyze different companies in a uniform manner using the most relevant data points. Gulfsands Petroleum’s most recent earnings -$17.6M, which compared to the previous year’s level, has become less negative. Given that these values may be fairly myopic, I have determined an annualized five-year value for Gulfsands Petroleum’s net income, which stands at -$32.3M. This shows that, although net income is negative, it has become less negative over the years.
We can further examine Gulfsands Petroleum’s loss by looking at what’s going on in the industry on top of within the company. First, I want to briefly look into the line items. Revenue growth over last few years has been negative at -26.78%. The key to profitability here is to make sure the company’s cost growth is well-managed. Inspecting growth from a sector-level, the UK oil and gas industry has been multiplying growth, more than doubling average earnings in the past twelve months, . This is a a strong change from a volatile drop of -28.32% in the previous few years. This means that any tailwind the industry is deriving benefit from, Gulfsands Petroleum has not been able to reap as much as its average peer.
What does this mean?
Gulfsands Petroleum’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 forecast what will happen in the future and when. The most insightful step is to assess company-specific issues Gulfsands Petroleum may be facing and whether management guidance has dependably been met in the past. I suggest you continue to research Gulfsands Petroleum to get a more holistic view of the stock by looking at:
1. Financial Health: Is GPX’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 GPX 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 GPX 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 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.