For investors, increase in profitability and industry-beating performance can be essential considerations in an investment. Below, I will examine Cadiz Inc’s (NASDAQ:CDZI) track record on a high level, to give you some insight into how the company has been performing against its long term trend and its industry peers. Check out our latest analysis for Cadiz
How Did CDZI’s Recent Performance Stack Up Against Its Past?
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 many different companies in a uniform manner using the most relevant data points. For Cadiz, its most recent trailing-twelve-month earnings is -US$33.86M, which, relative to the prior year’s figure, has become more negative. Since these figures are relatively nearsighted, I have estimated an annualized five-year figure for Cadiz’s net income, which stands at -US$22.58M. This doesn’t look much better, since earnings seem to have consistently been getting more and more negative over time.
We can further examine Cadiz’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Cadiz has seen an annual decline in revenue of -17.95%, 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 water utilities industry has been growing, albeit, at a muted single-digit rate of 7.31% over the prior year, and 6.84% over the past half a decade. This means any uplift the industry is benefiting from, Cadiz has not been able to realize the gains unlike its industry peers.
What does this mean?
Cadiz’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 happen in the future and when. The most valuable step is to assess company-specific issues Cadiz may be facing and whether management guidance has steadily been met in the past. You should continue to research Cadiz to get a better picture of the stock by looking at:
- Financial Health: Is CDZI’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.