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Today I will take a look at Global Petroleum Limited’s (ASX:GBP) most recent earnings update (31 December 2017) and compare these latest figures against its performance over the past few years, as well as how the rest of the oil and gas industry performed. As an investor, I find it beneficial to assess GBP’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time. Check out our latest analysis for Global Petroleum
Commentary On GBP’s Past Performance
I prefer 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 blend enables me to assess different stocks on a more comparable basis, using the latest information. For Global Petroleum, its latest trailing-twelve-month earnings is -US$1.87M, which, relative to last year’s level, has become less negative. Given that these figures are somewhat nearsighted, I have computed an annualized five-year value for Global Petroleum’s earnings, which stands at -US$3.93M. This means that, even though net income is negative, it has become less negative over the years.
We can further assess Global Petroleum’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Global Petroleum has seen its revenue fall by more than half, 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 ramping up growth, more than doubling average earnings in the prior year, and a notable 11.17% over the past five. This shows that whatever uplift the industry is profiting from, Global Petroleum has not been able to leverage it as much as its industry peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that incur net loss is always difficult to envisage what will happen in the future and when. The most useful step is to examine company-specific issues Global Petroleum may be facing and whether management guidance has consistently been met in the past. You should continue to research Global Petroleum to get a better picture of the stock by looking at:
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Financial Health: Is GBP’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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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.