After reading Electrawinds SE’s (DB:EWI) most recent earnings announcement (30 June 2017), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether Electrawinds’s performance has been impacted by industry movements. In this article I briefly touch on my key findings. Check out our latest analysis for Electrawinds
Were EWI’s earnings stronger than its past performances and the industry?
I like to use data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This allows me to analyze different companies on a more comparable basis, using new information. For Electrawinds, its latest trailing-twelve-month earnings is -€212.00K, which, against last year’s figure, has become less negative. Since these figures are somewhat short-term thinking, I’ve calculated an annualized five-year figure for Electrawinds’s earnings, which stands at -€32.64M. This means despite the fact that net income is negative, it has become less negative over the years.
We can further evaluate Electrawinds’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Electrawinds has seen an annual decline in revenue of -44.55%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Inspecting growth from a sector-level, the DE renewable energy industry has been growing, albeit, at a unexciting single-digit rate of 7.48% over the prior twelve months, and 9.07% over the previous five years. This shows that, while Electrawinds is currently loss-making, it may have benefited from industry tailwinds, moving earnings in the right direction.
What does this mean?
Electrawinds’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that incur net loss is always hard to forecast what will occur going forward, and when. The most valuable step is to examine company-specific issues Electrawinds may be facing and whether management guidance has consistently been met in the past. I suggest you continue to research Electrawinds to get a more holistic view of the stock by looking at: