Should SunPower Corporation’s (NASDAQ:SPWR) Recent Earnings Decline Worry You?
Measuring SunPower Corporation’s (NASDAQ:SPWR) track record of past performance is an insightful exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess SPWR’s recent performance announced on 01 October 2017 and compare these figures to its historical trend and industry movements. View our latest analysis for SunPower
How Well Did SPWR Perform?
For the purpose of this commentary, I like to use data from the most recent 12 months, 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 technique allows me to analyze various companies on a similar basis, using the latest information. For SunPower, its latest earnings (trailing twelve month) is -US$557.60M, which, relative to the previous year’s level, has become more negative. Since these values may be fairly myopic, I’ve calculated an annualized five-year value for SunPower’s net income, which stands at -US$196.40M. This doesn’t look much better, since earnings seem to have steadily been getting more and more negative over time.
We can further evaluate SunPower’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years SunPower has seen an annual decline in revenue of -2.29%, 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 semiconductor industry has been growing its average earnings by double-digit 12.11% over the past twelve months, and a less exciting 7.63% over the past half a decade. This suggests that any uplift the industry is enjoying, SunPower has not been able to reap as much as its industry peers.
What does this mean?
SunPower’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 occur going forward, and when. The most useful step is to examine company-specific issues SunPower may be facing and whether management guidance has regularly been met in the past. You should continue to research SunPower to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for SPWR’s future growth? Take a look at our free research report of analyst consensus for SPWR’s outlook.
2. Financial Health: Is SPWR’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 01 October 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.
