Assessing Cadiz Inc’s (NASDAQ:CDZI) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess CDZI’s recent performance announced on 30 September 2017 and evaluate these figures to its long-term trend and industry movements. See our latest analysis for Cadiz
Despite a decline, did CDZI underperform the long-term trend and the industry?
For the purpose of this commentary, I like to use the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This method allows me to analyze different companies on a more comparable basis, using new information. For Cadiz, its most recent bottom-line (trailing twelve month) is -$33.5M, which, in comparison to last year’s level, has become more negative. Given that these figures are somewhat short-term, I have created an annualized five-year figure for CDZI’s net income, which stands at -$21.9M. This doesn’t look much better, since earnings seem to have gradually been getting more and more negative over time.
Additionally, we can evaluate Cadiz’s loss by researching what has been happening in the industry as well as within the company. Firstly, I want to quickly look into the line items. Revenue growth over the last couple of years has been negative at -22.16%. The key to profitability here is to make sure the company’s cost growth is well-managed. Scanning growth from a sector-level, the US water utilities industry has been growing, albeit, at a subdued single-digit rate of 6.90% over the prior twelve months, and 7.64% over the past five years. This suggests that whatever uplift the industry is deriving benefit from, Cadiz has not been able to reap as much as its industry peers.
What does this mean?
Though Cadiz’s past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always hard to forecast what will happen in the future and when. The most useful step is to assess company-specific issues Cadiz may be facing and whether management guidance has dependably been met in the past. I suggest you continue to research Cadiz to get a better picture of the stock by looking at:
1. 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.
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 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.