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Where SPI Energy Co Ltd.’s (NASDAQ:SPI) Earnings Growth Stands Against Its Industry

Autumn Haas

After reading SPI Energy Co Ltd.’s (NASDAQ:SPI) latest earnings update (31 December 2016), I found it beneficial to look back at how the company has performed in the past and compare this against the most recent numbers. As a long-term investor I tend to pay attention to earnings trend, rather than a single number at one point in time. I also like to compare against an industry benchmark to understand whether SPI has outperformed, or whether it is simply riding an industry wave. Below is a brief commentary on my key takeaways. View our latest analysis for SPI Energy

How Did SPI’s Recent Performance Stack Up Against Its Past?

To account for any quarterly or half-yearly updates, 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 enables me to examine many different companies in a uniform manner using the most relevant data points. For SPI Energy, its most recent trailing-twelve-month earnings is -US$220.70M, which, in comparison to last year’s figure, has become more negative. Since these figures are relatively short-term thinking, I have estimated an annualized five-year figure for SPI Energy’s net income, which stands at -US$64.89M. This doesn’t seem to paint a better picture, since earnings seem to have consistently been getting more and more negative over time.

NasdaqGS:SPI Income Statement Apr 13th 18
NasdaqGS:SPI Income Statement Apr 13th 18

We can further assess SPI Energy’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years SPI Energy’s top-line has grown by 12.20% on average, indicating that the company is in a high-growth phase with expenses racing ahead revenues, leading to annual losses. Eyeballing growth from a sector-level, the US semiconductor industry has been growing its average earnings by double-digit 22.42% in the past year, and a more muted 7.85% over the previous five years. This shows that whatever uplift the industry is enjoying, SPI Energy has not been able to gain as much as its industry peers.

What does this mean?

Though SPI Energy’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always difficult to forecast what will occur going forward, and when. The most insightful step is to assess company-specific issues SPI Energy may be facing and whether management guidance has regularly been met in the past. You should continue to research SPI Energy to get a more holistic view of the stock by looking at:

  • 1. Financial Health: Is SPI’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 SPI 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 SPI 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 31 December 2016. 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.