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For long-term investors, assessing earnings trend over time and against industry benchmarks is more beneficial than examining a single earnings announcement at a point in time. Investors may find my commentary, albeit very high-level and brief, on American Patriot Oil & Gas Limited (ASX:AOW) useful as an attempt to give more color around how American Patriot Oil & Gas is currently performing. View our latest analysis for American Patriot Oil & Gas
Was AOW’s recent earnings decline indicative of a tough track record?
I use data from the most recent 12 months, 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 analyze different companies on a similar basis, using new information. For American Patriot Oil & Gas, its latest trailing-twelve-month earnings is -AU$4.83M, which compared to the prior year’s figure, has become more negative. Given that these values may be somewhat nearsighted, I’ve calculated an annualized five-year value for AOW’s net income, which stands at -AU$2.86M. This doesn’t look much better, since earnings seem to have consistently been getting more and more negative over time.
We can further evaluate American Patriot Oil & Gas’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade American Patriot Oil & Gas’s top-line has grown by 19.32% on average, signalling that the company is in a high-growth period with expenses racing ahead revenues, leading to annual losses. Inspecting growth from a sector-level, the Australian oil and gas industry has been growing growth, more than doubling average earnings in the prior year, and a notable 11.17% over the previous five years. This means that whatever uplift the industry is profiting from, American Patriot Oil & Gas has not been able to reap as much as its industry peers.
What does this mean?
American Patriot Oil & Gas’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 hard to predict what will happen in the future and when. The most insightful step is to examine company-specific issues American Patriot Oil & Gas may be facing and whether management guidance has dependably been met in the past. I recommend you continue to research American Patriot Oil & Gas to get a more holistic view of the stock by looking at: