After reading Baraka Energy & Resources Ltd’s (ASX:BKP) most recent earnings announcement (30 June 2017), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. 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 Baraka Energy & Resources’s performance has been impacted by industry movements. In this article I briefly touch on my key findings. Check out our latest analysis for Baraka Energy & Resources

Did BKP perform worse than its track record and industry?

For the purpose of this commentary, I like to use data from the most recent 12 months, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This technique enables me to analyze different companies in a uniform manner using the most relevant data points. For Baraka Energy & Resources, its most recent bottom-line (trailing twelve month) is -AU$326.36K, which, in comparison to the prior year’s level, has turned from positive to negative. Since these figures are fairly myopic, I’ve determined an annualized five-year value for Baraka Energy & Resources’s net income, which stands at AU$838.14K.

We can further assess Baraka Energy & Resources’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Baraka Energy & Resources has seen an annual decline in revenue of -68.02%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Viewing growth from a sector-level, the Australian oil and gas industry has been increasing growth, more than doubling average earnings in the previous twelve months, and a more subdued 7.32% over the past five. This means that any tailwind the industry is profiting from, Baraka Energy & Resources has not been able to leverage it as much as its industry peers.

What does this mean?

Baraka Energy & Resources’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 hard to envisage what will occur going forward, and when. The most valuable step is to examine company-specific issues Baraka Energy & Resources may be facing and whether management guidance has dependably been met in the past. I recommend you continue to research Baraka Energy & Resources to get a more holistic view of the stock by looking at the areas below. Just a heads up – to access some parts of the Simply Wall St research tool you might be asked to create a free account, but it takes just one click and the information they provide is definitely worth it in my opinion.