When CSI Compressco LP (NASDAQ:CCLP) released its most recent earnings update (30 September 2017), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Understanding how CSI Compressco performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see CCLP has performed. View our latest analysis for CSI Compressco
Were CCLP’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 blend enables me to examine different companies on a similar basis, using the latest information. For CSI Compressco, its latest earnings (trailing twelve month) is -$41.1M, which, in comparison to the previous year’s figure, has become less negative. Given that these figures are relatively nearsighted, I’ve created an annualized five-year figure for CSI Compressco’s net income, which stands at -$36.4M. This suggests that, CSI Compressco has historically performed better than recently, while it seems like earnings are now heading back in the right direction again.
We can further analyze CSI Compressco’s loss by researching what’s going on in the industry as well as within the company. Firstly, I want to quickly look into the line items. Revenue growth over the past couple of years has increased by 24.81%, signalling that CSI Compressco is in a high-growth phase with expenses racing ahead high top-line growth rates, leading to yearly losses. Eyeballing growth from a sector-level, the US energy services industry has been growing, albeit, at a muted single-digit rate of 3.17% in the previous twelve months, . This is a change from a volatile drop of -13.52% in the past few years. This suggests that although CSI Compressco is presently running a loss, whatever recent headwind the industry is facing, CSI Compressco is relatively better-cushioned than its peers.
What does this mean?
Though CSI Compressco’s past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always difficult to forecast what will happen in the future and when. The most useful step is to examine company-specific issues CSI Compressco may be facing and whether management guidance has steadily been met in the past. I suggest you continue to research CSI Compressco to get a more holistic view of the stock by looking at: