For investors with a long-term horizon, assessing earnings trend over time and against industry benchmarks is more valuable than looking at a single earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on Synthesis Energy Systems Inc (NASDAQ:SES) useful as an attempt to give more color around how Synthesis Energy Systems is currently performing. View our latest analysis for Synthesis Energy Systems
How Did SES’s Recent Performance Stack Up Against Its Past?
I prefer to use the ‘latest twelve-month’ data, 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 method allows me to examine many different companies in a uniform manner using the latest information. For Synthesis Energy Systems, its latest earnings (trailing twelve month) is -US$23.90M, which, in comparison to the previous year’s figure, has become more negative. Since these figures are relatively myopic, I’ve created an annualized five-year figure for SES’s earnings, which stands at -US$21.58M. This doesn’t look much better, as earnings seem to have gradually been getting more and more negative over time.
We can further assess Synthesis Energy Systems’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Synthesis Energy Systems has seen an annual decline in revenue of -10.38%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Viewing growth from a sector-level, the US energy services industry has been growing its average earnings by double-digit 22.95% in the prior year, . This is a turnaround from a volatile drop of -22.57% in the past few years. This means that whatever uplift the industry is benefiting from, Synthesis Energy Systems has not been able to gain as much as its average peer.
What does this mean?
While past data is useful, it doesn’t tell the whole story. With companies that are currently loss-making, it is always hard to envisage what will happen in the future and when. The most valuable step is to assess company-specific issues Synthesis Energy Systems may be facing and whether management guidance has consistently been met in the past. I recommend you continue to research Synthesis Energy Systems to get a better picture of the stock by looking at:
- Financial Health: Is SES’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.