Understanding how Northern Oil and Gas Inc (AMEX:NOG) is performing as a company requires looking at more than just a years’ earnings. Today I will run you through a basic sense check to gain perspective on how Northern Oil and Gas is doing by comparing its latest earnings with its long-term trend as well as the performance of its oil and gas industry peers. View our latest analysis for Northern Oil and Gas

How NOG fared against its long-term earnings performance and its industry

I like to use the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This enables me to assess different companies on a more comparable basis, using the most relevant data points. For Northern Oil and Gas, its most recent bottom-line (trailing twelve month) is -US$9.19M, which, relative to the prior year’s figure, has become less negative. Given that these values may be somewhat nearsighted, I’ve created an annualized five-year value for Northern Oil and Gas’s net income, which stands at -US$132.16M. This shows that, while net income is negative, it has become less negative over the years.

We can further evaluate Northern Oil and Gas’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Northern Oil and Gas’s revenue growth has been somewhat subdued, with an annual growth rate of 0.37%, on average. The company’s inability to breakeven has been aided by the relatively flat top-line in the past. Eyeballing growth from a sector-level, the US oil and gas industry has been growing its average earnings by double-digit 26.52% over the past twelve months, . This is a change from a volatile drop of -8.71% in the last few years. This means that, although Northern Oil and Gas is currently running a loss, it may have only just benefited from the recent industry expansion, moving earnings into a more favorable position.

What does this mean?

Though Northern Oil and Gas’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 occur going forward, and when. The most insightful step is to assess company-specific issues Northern Oil and Gas may be facing and whether management guidance has regularly been met in the past. I recommend you continue to research Northern Oil and Gas to get a more holistic view of the stock by looking at:

• 1. Future Outlook: What are well-informed industry analysts predicting for NOG’s future growth? Take a look at our free research report of analyst consensus for NOG’s outlook.

• 2. Financial Health: Is NOG’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.

• 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.