After reading Neptune Marine Services Limited’s (ASX:NMS) most recent earnings announcement (30 September 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 Neptune Marine Services’s performance has been impacted by industry movements. In this article I briefly touch on my key findings. See our latest analysis for Neptune Marine Services
Did NMS’s recent earnings growth beat the long-term trend and the industry?
I prefer to use the ‘latest twelve-month’ data, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This blend allows me to examine various companies on a similar basis, using the most relevant data points. For Neptune Marine Services, its most recent trailing-twelve-month earnings is -AU$9.48M, which, relative to the previous year’s figure, has become less negative. Since these values are somewhat myopic, I have determined an annualized five-year value for NMS’s net income, which stands at -AU$22.09M. This suggests that, although net income is negative, it has become less negative over the years.
We can further examine Neptune Marine Services’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Neptune Marine Services has seen an annual decline in revenue of -3.47%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Viewing growth from a sector-level, the Australian energy services industry has been growing its average earnings by double-digit 32.94% over the past twelve months, . This is a turnaround from a volatile drop of -14.47% in the past few years. This means any uplift the industry is profiting from, Neptune Marine Services has not been able to realize the gains unlike its average peer.
What does this mean?
Neptune Marine Services’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 hard to envisage what will occur going forward, and when. The most valuable step is to assess company-specific issues Neptune Marine Services may be facing and whether management guidance has regularly been met in the past. I suggest you continue to research Neptune Marine Services to get a better picture of the stock by looking at: