Assessing Carnegie Clean Energy Limited’s (ASX:CCE) performance as a company requires looking at more than just a years’ earnings data. Below, I will run you through a simple sense check to build perspective on how Carnegie Clean Energy is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its renewable energy industry peers. See our latest analysis for Carnegie Clean Energy
Commentary On CCE’s Past Performance
I like 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 technique enables me to analyze different stocks on a similar basis, using the latest information. Carnegie Clean Energy’s most recent earnings -A$14.4M, which, relative to last year’s level, has become more negative. Since these values may be somewhat short-term thinking, I’ve estimated an annualized five-year value for CCE’s earnings, which stands at -A$5.9M. This doesn’t seem to paint a better picture, as earnings seem to have steadily been getting more and more negative over time.
We can further evaluate Carnegie Clean Energy’s loss by looking at 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 past couple of years has increased by 37.53%, indicating that Carnegie Clean Energy is in a high-growth phase with expenses shooting ahead of high top-line growth rates. Inspecting growth from a sector-level, the Australian renewable energy industry has been enduring some headwinds in the previous twelve months, leading to an average earnings drop of -24.26%. This is a major change, given that the industry has been delivering a positive rate of 9.21%, on average, over the previous five years. This means that whatever near-term headwind the industry is enduring, it’s hitting Carnegie Clean Energy harder than its 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 hard to predict what will occur going forward, and when. The most valuable step is to assess company-specific issues Carnegie Clean Energy may be facing and whether management guidance has dependably been met in the past. I recommend you continue to research Carnegie Clean Energy to get a better picture of the stock by looking at:
1. Financial Health: Is CCE’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.