Assessing Geospace Technologies Corporation’s (NASDAQ:GEOS) past track record of performance is a valuable exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess GEOS’s recent performance announced on 31 March 2018 and evaluate these figures to its longer term trend and industry movements. See our latest analysis for Geospace Technologies
Was GEOS’s weak performance lately a part of a long-term decline?
For the purpose of this commentary, I like to use the ‘latest twelve-month’ data, 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 examine different companies on a more comparable basis, using the most relevant data points. For Geospace Technologies, its most recent earnings (trailing twelve month) is -US$47.79M, which, against last year’s level, has become more negative. Since these values may be relatively short-term thinking, I’ve estimated an annualized five-year figure for Geospace Technologies’s earnings, which stands at US$4.19M.
We can further assess Geospace Technologies’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Geospace Technologies has seen an annual decline in revenue of -18.64%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Inspecting growth from a sector-level, the US energy services industry has been growing its average earnings by double-digit 25.89% over the prior twelve months, . This is a change from a volatile drop of -19.04% in the previous couple of years. This suggests that any tailwind the industry is profiting from, Geospace Technologies has not been able to leverage it as much as its industry peers.
What does this mean?
Geospace Technologies’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 difficult to envisage what will occur going forward, and when. The most insightful step is to assess company-specific issues Geospace Technologies may be facing and whether management guidance has regularly been met in the past. You should continue to research Geospace Technologies to get a more holistic view of the stock by looking at:
- Financial Health: Is GEOS’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.
- Valuation: What is GEOS 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 GEOS is currently mispriced by the market.
- 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 March 2018. 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.