Independence Contract Drilling Inc’s (NYSE:ICD) Earnings Dropped -9.56%, Did Its Industry Show Weakness Too?
In this commentary, I will examine Independence Contract Drilling Inc’s (NYSE:ICD) latest earnings update (31 December 2017) and compare these figures against its performance over the past couple of years, as well as how the rest of the energy services industry performed. As an investor, I find it beneficial to assess ICD’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time. View our latest analysis for Independence Contract Drilling
Despite a decline, did ICD underperform the long-term trend and the industry?
To account for any quarterly or half-yearly updates, I use the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This blend enables me to assess various companies on a more comparable basis, using the latest information. For Independence Contract Drilling, its most recent earnings (trailing twelve month) is -US$24.30M, which, relative to the prior year’s figure, has become more negative. Given that these values are relatively short-term thinking, I’ve estimated an annualized five-year value for Independence Contract Drilling’s earnings, which stands at -US$16.76M. This doesn’t look much better, since earnings seem to have consistently been getting more and more negative over time.
We can further evaluate Independence Contract Drilling’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Independence Contract Drilling’s top-line has increased by 14.97% on average, indicating that the company is in a high-growth period with expenses racing ahead revenues, leading to annual losses. Viewing growth from a sector-level, the US energy services industry has been growing its average earnings by double-digit 25.46% in the past year, . This is a change from a volatile drop of -18.64% in the previous few years. This means that whatever tailwind the industry is benefiting from, Independence Contract Drilling has not been able to gain as much as its average peer.
What does this mean?
Independence Contract Drilling’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. With companies that are currently loss-making, it is always hard to predict what will happen in the future and when. The most insightful step is to examine company-specific issues Independence Contract Drilling may be facing and whether management guidance has consistently been met in the past. You should continue to research Independence Contract Drilling to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for ICD’s future growth? Take a look at our free research report of analyst consensus for ICD’s outlook.
2. Financial Health: Is ICD’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 trailing twelve months from 31 December 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.
