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Examining Kinetiko Energy Limited’s (ASX:KKO) past track record of performance is a useful exercise for investors. It allows us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess KKO’s latest performance announced on 30 June 2017 and weight these figures against its longer term trend and industry movements. See our latest analysis for Kinetiko Energy
Was KKO’s recent earnings decline indicative of a tough track record?
I look at 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 method allows me to analyze different stocks on a similar basis, using the most relevant data points. For Kinetiko Energy, its latest trailing-twelve-month earnings is -AU$961.74K, which, against last year’s level, has become more negative. Since these figures are somewhat short-term thinking, I’ve estimated an annualized five-year value for KKO’s earnings, which stands at -AU$1.24M. This means that, while net income is negative, it has become less negative over the years.
We can further examine Kinetiko Energy’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Kinetiko Energy has seen an annual decline in revenue of -34.72%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Scanning growth from a sector-level, the Australian oil and gas industry has been multiplying growth, more than doubling average earnings over the prior twelve months, and a more muted 9.50% over the past half a decade. This means whatever uplift the industry is enjoying, Kinetiko Energy has not been able to realize the gains unlike its industry peers.
What does this mean?
Kinetiko Energy’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 difficult to predict what will happen in the future and when. The most useful step is to examine company-specific issues Kinetiko Energy may be facing and whether management guidance has dependably been met in the past. You should continue to research Kinetiko Energy to get a better picture of the stock by looking at:
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1. Financial Health: Is KKO’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.
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2. 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 30 June 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.