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After reading Cenergy Holdings SA’s (ENXTBR:CENER) most recent earnings announcement (31 December 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 Cenergy Holdings’s performance has been impacted by industry movements. In this article I briefly touch on my key findings. View our latest analysis for Cenergy Holdings
Was CENER’s recent earnings decline indicative of a tough track record?
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 method allows me to analyze many different companies on a more comparable basis, using the latest information. For Cenergy Holdings, its most recent bottom-line (trailing twelve month) is -€4.76M, which compared to the prior year’s figure, has become more negative. Since these values may be relatively myopic, I have estimated an annualized five-year value for Cenergy Holdings’s net income, which stands at -€4.60M. This doesn’t look much better, since earnings seem to have consistently been getting more and more negative over time.
We can further assess Cenergy Holdings’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Cenergy Holdings has seen an annual decline in revenue of -2.73%, 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 BE metals and mining industry has been growing average earnings growth of 74.17% in the previous year, and a less exciting 3.08% over the past five years. This suggests that any uplift the industry is enjoying, Cenergy Holdings has not been able to realize the gains unlike its average peer.
What does this mean?
Cenergy Holdings’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 envisage what will occur going forward, and when. The most valuable step is to assess company-specific issues Cenergy Holdings may be facing and whether management guidance has regularly been met in the past. You should continue to research Cenergy Holdings to get a more holistic view of the stock by looking at: