Assessing DryShips Inc’s (NASDAQ:DRYS) past track record of performance is a useful exercise for investors. It allows us to understand whether the company has met or exceed expectations, which is a great indicator for future performance. Below, I assess DRYS’s latest performance announced on 31 December 2017 and evaluate these figures to its historical trend and industry movements. Check out our latest analysis for DryShips
How Well Did DRYS Perform?
I prefer to 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 allows me to assess different companies on a more comparable basis, using the most relevant data points. For DryShips, its latest earnings (trailing twelve month) is -US$39.74M, which, in comparison to last year’s level, has become less negative. Given that these values are somewhat short-term thinking, I have computed an annualized five-year value for DRYS’s earnings, which stands at -US$536.61M. This means despite the fact that net income is negative, it has become less negative over the years.
We can further evaluate DryShips’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years DryShips has seen an annual decline in revenue of -16.80%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Scanning growth from a sector-level, the US shipping industry has been growing, albeit, at a unexciting single-digit rate of 2.84% over the past twelve months, and a flatter -0.76% over the past five years. This shows that while DryShips is presently running a loss, any near-term headwind the industry is facing, the impact on DryShips has been softer relative to its peers.
What does this mean?
Though DryShips’s past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always difficult to forecast what will occur going forward, and when. The most insightful step is to examine company-specific issues DryShips may be facing and whether management guidance has dependably been met in the past. I suggest you continue to research DryShips to get a more holistic view of the stock by looking at:
- 1. Financial Health: Is DRYS’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 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.