Where Hillcrest Petroleum Ltd’s (CVE:HRH) Earnings Growth Stands Against Its Industry
For investors, increase in profitability and industry-beating performance can be essential considerations in an investment. Below, I will examine Hillcrest Petroleum Ltd’s (TSXV:HRH) track record on a high level, to give you some insight into how the company has been performing against its long term trend and its industry peers. View our latest analysis for Hillcrest Petroleum
How Well Did HRH Perform?
I 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 in a uniform manner using the most relevant data points. For Hillcrest Petroleum, its most recent earnings (trailing twelve month) is -CA$1.66M, which, in comparison to the previous year’s figure, has turned from positive to negative. Since these values may be relatively nearsighted, I have estimated an annualized five-year figure for HRH’s net income, which stands at -CA$1.21M. This doesn’t look much better, since earnings seem to have steadily been getting more and more negative over time.
We can further analyze Hillcrest Petroleum’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Hillcrest Petroleum’s top-line has risen by a mere 7.59%, on average. The company’s inability to breakeven has been aided by the relatively flat top-line in the past. Eyeballing growth from a sector-level, the Canadian oil and gas industry has been amplifying average earnings growth of 81.26% over the previous year, and a flatter 1.38% over the past half a decade. This suggests that any tailwind the industry is benefiting from, Hillcrest Petroleum has not been able to leverage it as much as its industry peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. With companies that are currently loss-making, it is always difficult to predict what will occur going forward, and when. The most insightful step is to examine company-specific issues Hillcrest Petroleum may be facing and whether management guidance has steadily been met in the past. I recommend you continue to research Hillcrest Petroleum to get a better picture of the stock by looking at:
Financial Health: Is HRH’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.
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.
