Assessing SandRidge Mississippian Trust I’s (NYSE:SDT) past track record of performance is a useful exercise for investors. It allows us to understand whether the company has met or exceed expectations, which is a great indicator for future performance. Below, I assess SDT’s latest performance announced on 30 September 2017 and evaluate these figures to its historical trend and industry movements. Check out our latest analysis for SandRidge Mississippian Trust I
Was SDT weak performance lately part of a long-term decline?
For the most up-to-date info, I use the ‘latest twelve-month’ data, 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 blend allows me to assess various companies on a more comparable basis, using the latest information. For SandRidge Mississippian Trust I, its most recent bottom-line (trailing twelve month) is US$6.35M, which, against last year’s level, has taken a dive by a significant -71.48%. Given that these values are relatively short-term thinking, I have created an annualized five-year value for SDT’s net income, which stands at US$42.96M This doesn’t seem to paint a better picture, as earnings seem to have steadily been declining over time.
Why is this? Well, let’s look at what’s occurring with margins and whether the entire industry is feeling the heat. Over the last few years, SandRidge Mississippian Trust I has, on average, delivered negative top- and bottom-line growth. As revenues dropped by more, expenses have been lowered in order to maintain margins – not the most sustainable operating activity. Scanning growth from a sector-level, the US oil and gas industry has been growing its average earnings by double-digit 20.21% over the prior year, . This is a change from a volatile drop of -8.11% in the past few years. This suggests that, in the recent industry expansion, SandRidge Mississippian Trust I has not been able to gain as much as its industry peers.
What does this mean?
SandRidge Mississippian Trust I’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Typically companies that endure an extended period of reduction in earnings are going through some sort of reinvestment phase in order to keep up with the recent industry disruption and growth. I recommend you continue to research SandRidge Mississippian Trust I to get a more holistic view of the stock by looking at:
- 1. Financial Health: Is SDT’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 SDT 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 SDT 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 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.