After looking at Po Valley Energy Limited’s (ASX:PVE) latest earnings announcement (30 June 2017), I found it useful to revisit the company’s performance in the past couple of years and assess this against the most recent figures. 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 Po Valley Energy’s performance has been impacted by industry movements. In this article I briefly touch on my key findings. See our latest analysis for Po Valley Energy
Were PVE’s earnings stronger than its past performances and the industry?
I look at 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 method enables me to assess many different companies in a uniform manner using the most relevant data points. For Po Valley Energy, the most recent bottom-line -€7.1M, which, in comparison to the prior year’s figure, has become less negative. Given that these figures may be somewhat nearsighted, I have computed an annualized five-year value for PVE’s net income, which stands at -€3.8M. This suggests that, Po Valley Energy has historically performed better than recently, though it seems like earnings are now heading back towards a more favorable position once more.
Additionally, we can assess Po Valley Energy’s loss by looking at what has been happening in the industry on top of within the company. Initially, I want to quickly look into the line items. Revenue growth over the past few years has been negative at -25.20%. The key to profitability here is to make sure the company’s cost growth is well-controlled. Inspecting growth from a sector-level, the Australian oil and gas industry has been enduring some headwinds over the prior twelve months, leading to an average earnings drop of -25.18%. This is a significant change, given that the industry has constantly been delivering a a robust growth of 28.17% in the past five years. This shows that whatever near-term headwind the industry is experiencing, Po Valley Energy is less exposed compared to its peers.
What does this mean?
Though Po Valley Energy’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always difficult to forecast what will happen in the future and when. The most useful step is to examine company-specific issues Po Valley Energy may be facing and whether management guidance has dependably been met in the past. You should continue to research Po Valley Energy to get a better picture of the stock by looking at: