When Polar Power Inc (NASDAQ:POLA) announced its most recent earnings (31 December 2017), I did two things: looked at its past earnings track record, then look at what is happening in the industry. Understanding how Polar Power performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see POLA has performed. See our latest analysis for Polar Power
Was POLA weak performance lately part of a long-term decline?
I like 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 assess different stocks in a uniform manner using the most relevant data points. For Polar Power, its most recent trailing-twelve-month earnings is -US$777.58K, which, against last year’s level, has turned from positive to negative. Since these figures may be relatively short-term thinking, I’ve determined an annualized five-year figure for Polar Power’s net income, which stands at US$1.79M.
We can further analyze Polar Power’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Polar Power’s top-line has increased by 35.95% on average, indicating that the company is in a high-growth period with expenses racing ahead revenues, leading to annual losses. Scanning growth from a sector-level, the US electrical industry has been growing, albeit, at a muted single-digit rate of 6.07% over the previous twelve months, and 9.36% over the past half a decade. This shows that any uplift the industry is benefiting from, Polar Power has not been able to gain as much as its average peer.
What does this mean?
Polar Power’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 difficult to envisage what will occur going forward, and when. The most valuable step is to assess company-specific issues Polar Power may be facing and whether management guidance has consistently been met in the past. You should continue to research Polar Power to get a more holistic view of the stock by looking at:
- 1. Financial Health: Is POLA’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. 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.