U.S. Markets closed
  • S&P 500

    +16.20 (+0.47%)
  • Dow 30

    +113.39 (+0.40%)
  • Nasdaq

    +37.59 (+0.33%)
  • Russell 2000

    +4.08 (+0.25%)
  • Crude Oil

    +0.68 (+1.67%)
  • Gold

    -2.30 (-0.12%)
  • Silver

    +0.05 (+0.19%)

    +0.0053 (+0.4494%)
  • 10-Yr Bond

    +0.0360 (+4.73%)
  • Vix

    +0.17 (+0.58%)

    +0.0001 (+0.0104%)

    0.0000 (0.0000%)

    +830.86 (+7.51%)
  • CMC Crypto 200

    +0.04 (+0.02%)
  • FTSE 100

    +4.57 (+0.08%)
  • Nikkei 225

    -104.06 (-0.44%)

Was Houston American Energy Corp’s (NYSEMKT:HUSA) Earnings Growth Better Than The Industry’s?

Jonathon Baker

Examining how Houston American Energy Corp (AMEX:HUSA) is performing as a company requires looking at more than just a years’ earnings. Below, I will run you through a simple sense check to build perspective on how Houston American Energy is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its oil and gas industry peers. Check out our latest analysis for Houston American Energy

Did HUSA’s recent earnings growth beat the long-term trend and the industry?

For the purpose of this commentary, I like to use 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 technique enables me to assess various companies on a more comparable basis, using the most relevant data points. For Houston American Energy, its most recent bottom-line (trailing twelve month) is -US$1.73M, which compared to the previous year’s level, has become less negative. Since these figures are fairly nearsighted, I have estimated an annualized five-year value for Houston American Energy’s net income, which stands at -US$9.61M. This suggests that, although net income is negative, it has become less negative over the years.

AMEX:HUSA Income Statement May 25th 18
AMEX:HUSA Income Statement May 25th 18

We can further assess Houston American Energy’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Houston American Energy has seen an annual decline in revenue of -40.38%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Looking at growth from a sector-level, the US oil and gas industry has been growing its average earnings by double-digit 25.00% over the past year, . This is a change from a volatile drop of -5.41% in the past few years. This means while Houston American Energy is presently unprofitable, it may have only just gained from the recent industry expansion, moving earnings towards to right direction.

What does this mean?

Houston American Energy’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 difficult to predict what will occur going forward, and when. The most useful step is to examine company-specific issues Houston American Energy may be facing and whether management guidance has consistently been met in the past. I recommend you continue to research Houston American Energy to get a more holistic view of the stock by looking at:

  1. Financial Health: Is HUSA’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 31 March 2018. 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.