Pattern Energy Group Inc (NASDAQ:PEGI): Should The Recent Earnings Drop Worry You?
Examining how Pattern Energy Group Inc (NASDAQ:PEGI) 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 Pattern Energy Group is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its renewable energy industry peers. View our latest analysis for Pattern Energy Group
Was PEGI weak performance lately part of a long-term decline?
I 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 blend enables me to assess different companies in a uniform manner using the most relevant data points. For Pattern Energy Group, its most recent earnings (trailing twelve month) is -US$18.01M, which, against the prior year’s level, has become more negative. Given that these values may be somewhat nearsighted, I’ve determined an annualized five-year figure for Pattern Energy Group’s earnings, which stands at -US$18.31M. This means despite the fact that net income is negative, it has become less negative over the years.
We can further analyze Pattern Energy Group’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Pattern Energy Group’s top-line has risen by 22.04% on average, signalling that the company is in a high-growth phase with expenses shooting ahead of revenues, leading to annual losses. Scanning growth from a sector-level, the US renewable energy industry has been relatively flat in terms of earnings growth over the past few years. This shows that any recent headwind the industry is enduring, it’s hitting Pattern Energy Group harder than its peers.
What does this mean?
Though Pattern Energy Group’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always difficult to predict what will happen in the future and when. The most insightful step is to assess company-specific issues Pattern Energy Group may be facing and whether management guidance has regularly been met in the past. I suggest you continue to research Pattern Energy Group to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for PEGI’s future growth? Take a look at our free research report of analyst consensus for PEGI’s outlook.
Financial Health: Is PEGI’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.
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.
