In this commentary, I will examine McPhy Energy SA.’s (ENXTPA:MCPHY) latest earnings update (31 December 2017) and compare these figures against its performance over the past couple of years, as well as how the rest of the machinery industry performed. As an investor, I find it beneficial to assess MCPHY’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. View our latest analysis for McPhy Energy
Commentary On MCPHY’s Past Performance
For the purpose of this commentary, 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 blend enables me to assess different companies on a more comparable basis, using new information. For McPhy Energy, its latest earnings (trailing twelve month) is -€6.70M, which compared to the prior year’s level, has become less negative. Given that these figures may be fairly short-term, I’ve calculated an annualized five-year value for McPhy Energy’s earnings, which stands at -€8.82M. This means while net income is negative, it has become less negative over the years.
We can further analyze McPhy Energy’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years McPhy Energy’s top-line has grown by 38.70% on average, implying 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 FR machinery industry has been growing its average earnings by double-digit 25.23% over the prior year, and 13.36% over the past five years. This suggests that any uplift the industry is benefiting from, McPhy Energy has not been able to reap as much as its industry peers.
What does this mean?
McPhy 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 forecast what will happen in the future and when. The most valuable step is to assess company-specific issues McPhy Energy may be facing and whether management guidance has dependably been met in the past. I suggest you continue to research McPhy Energy to get a better picture of the stock by looking at:
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1. Future Outlook: What are well-informed industry analysts predicting for MCPHY’s future growth? Take a look at our free research report of analyst consensus for MCPHY’s outlook.
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2. Financial Health: Is MCPHY’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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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.