Measuring Baker Technology Limited’s (SGX:BTP) track record of past performance is a useful exercise for investors. It enables us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess BTP’s recent performance announced on 31 December 2017 and weigh these figures against its long-term trend and industry movements. Check out our latest analysis for Baker Technology

Commentary On BTP’s Past Performance

I 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 enables me to analyze various companies on a more comparable basis, using the latest information. For Baker Technology, its most recent trailing-twelve-month earnings is -S$10.69M, which, against the prior year’s figure, has become more negative. Since these figures may be relatively nearsighted, I’ve calculated an annualized five-year figure for BTP’s earnings, which stands at S$18.53M.

We can further examine Baker Technology’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Baker Technology has seen an annual decline in revenue of -18.73%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Inspecting growth from a sector-level, the SG energy services industry has been enduring severe headwinds in the past year, leading to an average earnings drop of -47.91%. This is a major change, given that the industry has been delivering a positive rate of 2.34%, on average, over the previous five years. This means that though Baker Technology is presently running a loss, any near-term headwind the industry is enduring, Baker Technology is relatively better-cushioned than its peers.

What does this mean?

Baker Technology’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 useful step is to assess company-specific issues Baker Technology may be facing and whether management guidance has dependably been met in the past. I suggest you continue to research Baker Technology to get a more holistic view of the stock by looking at:

• 1. Financial Health: Is BTP’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.

• 2. Valuation: What is BTP worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether BTP is currently mispriced by the market.

• 3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2017. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.