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Examining Fuel Tech Inc’s (NASDAQ:FTEK) past track record of performance is a useful exercise for investors. It allows us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess FTEK’s latest performance announced on 31 December 2017 and weight these figures against its longer term trend and industry movements. View our latest analysis for Fuel Tech
How Did FTEK’s Recent Performance Stack Up Against Its Past?
I prefer to 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 method allows me to analyze many different companies on a similar basis, using the most relevant data points. For Fuel Tech, its most recent bottom-line (trailing twelve month) is -US$7.07M, which, in comparison to the previous year’s level, has become less negative. Given that these figures may be relatively short-term, I have estimated an annualized five-year figure for FTEK’s earnings, which stands at -US$5.30M. This shows that, Fuel Tech has historically performed better than recently, though it seems like earnings are now heading back in the right direction again.
We can further evaluate Fuel Tech’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Fuel Tech has seen an annual decline in revenue of -10.08%, 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 commercial services industry has been growing, albeit, at a muted single-digit rate of 6.58% in the previous twelve months, and 9.50% over the past five years. This means that, even though Fuel Tech is currently running a loss, it may have benefited from industry tailwinds, moving earnings towards to right direction.
What does this mean?
Fuel Tech’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 forecast what will occur going forward, and when. The most useful step is to assess company-specific issues Fuel Tech may be facing and whether management guidance has consistently been met in the past. You should continue to research Fuel Tech to get a better picture of the stock by looking at:
1. Financial Health: Is FTEK’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.
2. Valuation: What is FTEK worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether FTEK is currently mispriced by the market.
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 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.