When Locality Planning Energy Holdings Limited’s (ASX:LPE) announced its latest earnings (30 June 2017), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were Locality Planning Energy Holdings’s average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not LPE actually performed well. Below is a quick commentary on how I see LPE has performed. Check out our latest analysis for Locality Planning Energy Holdings
Despite a decline, did LPE underperform the long-term trend and the industry?
I 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 enables me to examine many different companies on a more comparable basis, using the latest information. For Locality Planning Energy Holdings, the latest twelve-month earnings -A$15.9M, which, relative to the previous year’s figure, has become more negative. Given that these values are somewhat myopic, I’ve determined an annualized five-year value for LPE’s net income, which stands at -A$8.5M. This doesn’t look much better, since earnings seem to have consistently been getting more and more negative over time.
Additionally, we can evaluate Locality Planning Energy Holdings’s loss by looking at what’s going on in the industry as well as within the company. Firstly, I want to briefly look into the line items. Revenue growth over the past few years has more than doubled, indicating that Locality Planning Energy Holdings is in a high-growth phase with expenses shooting ahead of high top-line growth rates. Scanning growth from a sector-level, the Australian electric utilities industry has been enduring some headwinds in the prior year, leading to average earnings dropping by more than half. This is a a notable change, given that the industry has been delivering a relatively flat growth rate over the last few years. This shows that whatever recent the industry is experiencing, it’s hitting Locality Planning Energy Holdings harder than its peers.
What does this mean?
Locality Planning Energy Holdings’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 difficult to forecast what will occur going forward, and when. The most useful step is to assess company-specific issues Locality Planning Energy Holdings may be facing and whether management guidance has steadily been met in the past. I recommend you continue to research Locality Planning Energy Holdings to get a more holistic view of the stock by looking at: