Assessing Buru Energy Limited’s (ASX:BRU) past track record of performance is a valuable exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess BRU’s recent performance announced on 30 June 2017 and evaluate these figures to its longer term trend and industry movements. See our latest analysis for Buru Energy

Commentary On BRU’s Past Performance

I use the ‘latest twelve-month’ data, 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 blend allows me to analyze various companies on a more comparable basis, using new information. For Buru Energy, its most recent trailing-twelve-month earnings is -A$30.1M, which, in comparison to the prior year’s level, has become less negative. Given that these values may be fairly nearsighted, I’ve estimated an annualized five-year value for BRU’s net income, which stands at -A$23.3M. This suggests that, Buru Energy has historically performed better than recently, although it seems like earnings are now heading back in the right direction again.

We can further examine Buru Energy’s loss by looking at what has been happening in the industry as well as within the company. Initially, I want to quickly look into the line items. Revenue growth over the past couple of years has increased by a mere 4.09%. Since top-line growth is also pretty flat, the key to profitability moving forward would be controlling cost growth rates. Viewing growth from a sector-level, the Australian oil and gas industry has been enduring some headwinds over the previous twelve months, leading to an average earnings drop of -25.18%. This is a significant change, given that the industry has constantly been delivering a a strong growth of 28.17% in the past five years. This means that despite the fact that Buru Energy is presently loss-making, whatever near-term headwind the industry is experiencing, Buru Energy is less exposed compared to its peers.

What does this mean?

Though Buru Energy’s past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always hard to forecast what will happen in the future and when. The most useful step is to examine company-specific issues Buru Energy may be facing and whether management guidance has steadily been met in the past. You should continue to research Buru Energy to get a more holistic view of the stock by looking at: