In this commentary, I will examine Sunworks Inc’s (NASDAQ:SUNW) latest earnings update (30 September 2017) and compare these figures against its performance over the past couple of years, as well as how the rest of the electrical industry performed. As an investor, I find it beneficial to assess SUNW’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 Sunworks
Did SUNW perform worse than its track record and industry?
I use data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This blend allows me to examine many different companies in a uniform manner using the most relevant data points. For Sunworks, its most recent trailing-twelve-month earnings is -US$7.46M, which, relative to the previous year’s level, has become more negative. Given that these values may be somewhat nearsighted, I have computed an annualized five-year value for SUNW’s earnings, which stands at -US$6.38M. This doesn’t seem to paint a better picture, as earnings seem to have gradually been getting more and more negative over time.
We can further evaluate Sunworks’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Sunworks’s top-line has increased by 52.69% on average, implying 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 electrical industry has been growing, albeit, at a subdued single-digit rate of 4.94% in the previous year, and 9.92% over the past five. This shows that any near-term headwind the industry is experiencing, it’s hitting Sunworks harder than its peers.
What does this mean?
Sunworks’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 hard to envisage what will occur going forward, and when. The most valuable step is to assess company-specific issues Sunworks may be facing and whether management guidance has steadily been met in the past. I suggest you continue to research Sunworks to get a better picture of the stock by looking at:
- 1. Future Outlook: What are well-informed industry analysts predicting for SUNW’s future growth? Take a look at our free research report of analyst consensus for SUNW’s outlook.
- 2. Financial Health: Is SUNW’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 30 September 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.