For long-term investors, assessing earnings trend over time and against industry benchmarks is more beneficial than examining a single earnings announcement at a point in time. Investors may find my commentary, albeit very high-level and brief, on Centrus Energy Corp (AMEX:LEU) useful as an attempt to give more color around how Centrus Energy is currently performing. See our latest analysis for LEU
How Well Did LEU Perform?
I prefer to use data from the most recent 12 months, 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 on a more comparable basis, using the most relevant data points. For Centrus Energy, the most recent bottom-line -$36.5M, which compared to the prior year’s figure, has become less negative. Since these figures are somewhat short-term thinking, I’ve calculated an annualized five-year value for Centrus Energy’s earnings, which stands at -$310.3M. This shows that, though net income is negative, it has become less negative over the years.
We can further examine Centrus Energy’s loss by looking at what’s going on in the industry as well as within the company. Initially, I want to briefly look into the line items. Revenue growth over past few years has been negative at -30.58%. The key to profitability here is to make sure the company’s cost growth is well-controlled. Eyeballing growth from a sector-level, the US oil, gas and consumable fuels industry has been growing its average earnings by double-digit 13.68% in the past year, . This is a turnaround from a volatile drop of -7.90% in the last couple of years. This means that, while Centrus Energy is currently loss-making, it may have only just benefited from the recent industry expansion, moving earnings in the right direction.
What does this mean?
Centrus Energy’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. With companies that are currently loss-making, it is always difficult to forecast what will happen in the future and when. The most valuable step is to examine company-specific issues Centrus Energy may be facing and whether management guidance has regularly been met in the past. I suggest you continue to research Centrus Energy to get a more holistic view of the stock by looking at:
1. Financial Health: Is LEU’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.