In this article, I will take a look at Ensco plc’s (NYSE:ESV) most recent earnings update (30 September 2017) and compare these latest figures against its performance over the past few years, along with how the rest of ESV’s industry performed. As a long-term investor, I find it useful to analyze the company’s trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time. Check out our latest analysis for Ensco
Commentary On ESV’s Past Performance
I use data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This technique enables me to analyze different stocks on a more comparable basis, using the latest information. For Ensco, its most recent trailing-twelve-month earnings is -US$68.90M, which, in comparison to last year’s figure, has become less negative. Given that these figures may be fairly myopic, I’ve created an annualized five-year figure for ESV’s net income, which stands at -US$674.07K. This suggests that, Ensco has historically performed better than recently, despite the fact that it seems like earnings are now heading back in the right direction again.
We can further assess Ensco’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Ensco’s revenue growth has been relatively soft, with an annual growth rate of 0.24%, 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 energy services industry has been growing its average earnings by double-digit 21.56% in the prior twelve months, . This is a change from a volatile drop of -20.84% in the previous couple of years. This means despite the fact that Ensco is presently unprofitable, it may have only just been aided by the recent industry expansion, moving earnings into a more favorable position.
What does this mean?
Ensco’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 happen in the future and when. The most useful step is to assess company-specific issues Ensco may be facing and whether management guidance has regularly been met in the past. You should continue to research Ensco to get a more holistic view of the stock by looking at: