After reading ClearSign Combustion Corporation’s (NASDAQ:CLIR) latest earnings update (30 September 2017), 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 CLIR has outperformed, or whether it is simply riding an industry wave. Below is a brief commentary on my key takeaways. See our latest analysis for CLIR
How Well Did CLIR Perform?
For the most up-to-date info, 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 blend enables me to analyze different stocks on a more comparable basis, using new information. For ClearSign Combustion, the most recent earnings -$9.4M, which, in comparison to the previous year’s figure, has become less negative. Given that these values are fairly short-term thinking, I’ve calculated an annualized five-year figure for CLIR’s net income, which stands at -$6.1M. This shows that, ClearSign Combustion has historically performed better than recently, despite the fact that it seems like earnings are now heading back in the right direction again.
We can further assess ClearSign Combustion’s loss by researching what’s going on in the industry as well as within the company. First, I want to briefly look into the line items. Revenue growth over last few years has increased by 60.72%, signalling that ClearSign Combustion is in a high-growth period with expenses shooting ahead of high top-line growth rates. Inspecting growth from a sector-level, the US electronic equipment, instruments and components industry has been growing its average earnings by double-digit 22.40% over the previous year, and 10.20% over the previous few years. This means that whatever tailwind the industry is deriving benefit from, ClearSign Combustion has not been able to gain as much as its average peer.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that incur net loss is always difficult to envisage what will happen in the future and when. The most valuable step is to examine company-specific issues ClearSign Combustion may be facing and whether management guidance has regularly been met in the past. I suggest you continue to research ClearSign Combustion to get a more holistic view of the stock by looking at: