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Analyzing KrisEnergy Ltd’s (SGX:SK3) track record of past performance is a valuable exercise for investors. It enables us to reflect on whether or not the company has met expectations, which is a powerful signal for future performance. Today I will assess SK3’s recent performance announced on 30 September 2017 and compare these figures to its long-term trend and industry movements. View our latest analysis for KrisEnergy
Was SK3’s weak performance lately a part of a long-term decline?
For the most up-to-date info, I use data from the most recent 12 months, 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 method enables me to assess different stocks on a more comparable basis, using the most relevant data points. For KrisEnergy, its most recent trailing-twelve-month earnings is -US$211.90M, which, against the previous year’s figure, has become more negative. Since these figures are fairly myopic, I’ve calculated an annualized five-year value for SK3’s earnings, which stands at -US$70.87M. This doesn’t look much better, since earnings seem to have consistently been getting more and more negative over time.
We can further evaluate KrisEnergy’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years KrisEnergy’s top-line has increased by 11.78% on average, indicating that the company is in a high-growth period with expenses racing ahead revenues, leading to annual losses. Inspecting growth from a sector-level, the SG oil and gas industry has been growing its average earnings by double-digit 32.19% over the past year, and 13.86% over the past five. This shows that whatever tailwind the industry is enjoying, KrisEnergy has not been able to gain as much as its industry peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. With companies that are currently loss-making, it is always hard to forecast what will occur going forward, and when. The most useful step is to examine company-specific issues KrisEnergy may be facing and whether management guidance has consistently been met in the past. You should continue to research KrisEnergy to get a better picture of the stock by looking at:
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1. Financial Health: Is SK3’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. Valuation: What is SK3 worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether SK3 is currently mispriced by the market.
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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 30 September 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.