Assessing Saffron Energy Plc’s (AIM:SRON) past track record of performance is a useful exercise for investors. It allows us to understand whether the company has met or exceed expectations, which is a great indicator for future performance. Below, I assess SRON’s latest performance announced on 30 June 2017 and evaluate these figures to its historical trend and industry movements. View our latest analysis for Saffron Energy
Did SRON perform worse than its track record and 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 assess different companies on a similar basis, using the most relevant data points. Saffron Energy’s most recent bottom-line -€5.6M, which compared to the prior year’s figure, has become more negative. Since these values are somewhat short-term thinking, I have created an annualized five-year figure for SRON’s earnings, which stands at -€4.4M. This doesn’t look much better, as earnings seem to have consistently been getting more and more negative over time.
We can further assess Saffron Energy’s loss by researching what’s going on in the industry along with within the company. First, I want to quickly look into the line items. Revenue growth over last few years has been negative at -56.01%. The key to profitability here is to make sure the company’s cost growth is well-controlled. Scanning growth from a sector-level, the UK oil and gas industry has been growing growth, more than doubling average earnings over the past twelve months, . This is a a solid change from a volatile drop of -28.32% in the last couple of years. This means whatever uplift the industry is profiting from, Saffron Energy has not been able to leverage it as much as its average peer.
What does this mean?
Though Saffron Energy’s past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always difficult to envisage what will happen in the future and when. The most insightful step is to examine company-specific issues Saffron Energy may be facing and whether management guidance has dependably been met in the past. I suggest you continue to research Saffron Energy to get a more holistic view of the stock by looking at:
1. Financial Health: Is SRON’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.