Understanding Energy Technologies Limited’s (ASX:EGY) performance as a company requires examining more than earnings from one point in time. Today I will take you through a basic sense check to gain perspective on how Energy Technologies is doing by evaluating its latest earnings with its longer term trend as well as its industry peers’ performance over the same period. See our latest analysis for EGY
How Did EGY’s Recent Performance Stack Up Against Its Past?
I like to use the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This technique allows me to examine different companies in a uniform manner using the most relevant data points. For Energy Technologies, the latest twelve-month earnings -A$2.9M, which, against the prior year’s figure, has become more negative. Given that these values are fairly short-term thinking, I’ve calculated an annualized five-year value for Energy Technologies’s net income, which stands at -A$2.3M. This doesn’t seem to paint a better picture, as earnings seem to have consistently been getting more and more negative over time.
Additionally, we can examine Energy Technologies’s loss by looking at what’s going on in the industry as well as within the company. Firstly, I want to quickly look into the line items. Revenue growth over past few years has grew by 18.08%, implying that Energy Technologies is in a high-growth period with expenses racing ahead high top-line growth rates. Scanning growth from a sector-level, the Australian electrical equipment industry has been enduring severe headwinds over the past twelve months, leading to an average earnings drop of -45.82%. This is a momentous change, given that the industry has constantly been delivering a a notable growth of 11.39% in the previous few years. This suggests that any near-term headwind the industry is enduring, Energy Technologies is relatively better-cushioned than its peers.
What does this mean?
Though Energy Technologies’s past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always difficult to envisage what will happen in the future and when. The most insightful step is to examine company-specific issues Energy Technologies may be facing and whether management guidance has dependably been met in the past. You should continue to research Energy Technologies to get a better picture of the stock by looking at: