Measuring Norwest Energy NL’s (ASX:NWE) track record of past performance is a valuable exercise for investors. It allows us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess NWE’s recent performance announced on 30 June 2017 and compare these figures to its historical trend and industry movements. Check out our latest analysis for Norwest Energy
Did NWE beat its long-term earnings growth trend and its industry?
To account for any quarterly or half-yearly updates, I use data from the most recent 12 months, 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 enables me to examine many different companies in a uniform manner using the latest information. Norwest Energy’s latest twelve-month earnings -A$0.2M, which, against last year’s figure, has become less negative. Given that these values are fairly nearsighted, I’ve calculated an annualized five-year figure for Norwest Energy’s net income, which stands at -A$3.2M. This shows that, although net income is negative, it has become less negative over the years.
We can further assess Norwest Energy’s loss by researching what’s going on in the industry on top of within the company. Initially, I want to briefly look into the line items. Revenue growth over past couple of years has been negative at -45.41%. The key to profitability here is to make sure the company’s cost growth is well-managed. Viewing growth from a sector-level, the Australian oil and gas industry has been enduring some headwinds over the past year, leading to an average earnings drop of -25.18%. This is a significant change, given that the industry has constantly been delivering a a solid growth of 28.17% in the previous few years. This means that whatever recent headwind the industry is facing, the impact on Norwest Energy has been softer relative to its peers.
What does this mean?
Norwest Energy’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 difficult to forecast what will occur going forward, and when. The most insightful step is to assess company-specific issues Norwest Energy may be facing and whether management guidance has steadily been met in the past. You should continue to research Norwest Energy to get a more holistic view of the stock by looking at: