After looking at Bill Barrett Corporation’s (NYSE:BBG) latest earnings update (30 September 2017), I found it helpful to revisit the company’s performance in the past couple of years and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is an important aspect. In this article I briefly touch on my key findings. See our latest analysis for BBG
Were BBG’s earnings stronger than its past performances and the industry?
For the purpose of this commentary, I like 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 method allows me to examine various companies on a more comparable basis, using the most relevant data points. For Bill Barrett, the latest earnings -$109.7M, which, against the prior year’s figure, has become less negative. Since these values are relatively short-term, I have computed an annualized five-year figure for Bill Barrett’s earnings, which stands at -$113.4M. This shows that, while net income is negative, it has become less negative over the years.
Additionally, we can assess Bill Barrett’s loss by researching what has been happening in the industry along with within the company. First, I want to briefly look into the line items. Revenue growth over last couple of years has been negative at -22.20%. The key to profitability here is to make sure the company’s cost growth is well-controlled. Viewing growth from a sector-level, the US oil, gas and consumable fuels industry has been growing its average earnings by double-digit 13.68% in the prior year, . This is a change from a volatile drop of -7.90% in the previous few years. This means that, although Bill Barrett is currently unprofitable, it may have only just been aided by the recent industry expansion, moving earnings towards to right direction.
What does this mean?
Though Bill Barrett’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always hard to forecast what will happen in the future and when. The most useful step is to examine company-specific issues Bill Barrett may be facing and whether management guidance has regularly been met in the past. I suggest you continue to research Bill Barrett to get a better picture of the stock by looking at: