Increase in profitability and industry-beating performance can be essential considerations in a stock for some investors. In this article, I will take a look at Infrastructure and Energy Alternatives Inc’s (NASDAQ:IEA) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers. See our latest analysis for Infrastructure and Energy Alternatives
Was IEA’s recent earnings decline worse than the long-term trend and the industry?
For the purpose of this commentary, I like to 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 method allows me to examine many different companies in a uniform manner using the most relevant data points. For Infrastructure and Energy Alternatives, its most recent earnings (trailing twelve month) is US$16.53M, which, in comparison to last year’s figure, has plunged by a significant -74.36%. Since these values may be fairly short-term, I have created an annualized five-year value for IEA’s net income, which stands at US$22.62M This doesn’t look much better, as earnings seem to have gradually been falling over time.
Why is this? Well, let’s look at what’s transpiring with margins and whether the rest of the industry is experiencing the hit as well. Over the past couple of years, revenue growth has fallen behind which suggests that Infrastructure and Energy Alternatives’s bottom line has been driven by unsustainable cost-cutting. Scanning growth from a sector-level, the US construction industry has been growing, albeit, at a muted single-digit rate of 9.70% in the past twelve months, and 6.31% over the past five. This suggests that any tailwind the industry is deriving benefit from, Infrastructure and Energy Alternatives has not been able to realize the gains unlike its average peer.
What does this mean?
Infrastructure and Energy Alternatives’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Generally companies that face a prolonged period of diminishing earnings are going through some sort of reinvestment phase with the aim of keeping up with the latest industry disruption and growth. I recommend you continue to research Infrastructure and Energy Alternatives to get a more holistic view of the stock by looking at:
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1. Future Outlook: What are well-informed industry analysts predicting for IEA’s future growth? Take a look at our free research report of analyst consensus for IEA’s outlook.
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2. Financial Health: Is IEA’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
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3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2017. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.