When First Ship Lease Trust (SGX:D8DU) released its most recent earnings update (31 December 2017), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were First Ship Lease Trust’s average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not D8DU actually performed well. Below is a quick commentary on how I see D8DU has performed. Check out our latest analysis for First Ship Lease Trust

Did D8DU perform worse than its track record and industry?

For the purpose of this commentary, I like to 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 technique allows me to analyze different companies in a uniform manner using the latest information. For First Ship Lease Trust, its most recent bottom-line (trailing twelve month) is -US$73.89M, which, against the previous year’s figure, has become more negative. Given that these values may be fairly nearsighted, I have computed an annualized five-year figure for D8DU’s net income, which stands at -US$19.65M. This doesn’t seem to paint a better picture, as earnings seem to have gradually been getting more and more negative over time.

We can further examine First Ship Lease Trust’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade First Ship Lease Trust has seen an annual decline in revenue of -2.12%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Eyeballing growth from a sector-level, the SG diversified financial industry has been growing its average earnings by double-digit 19.07% over the previous twelve months, and 11.44% over the past five. This means whatever tailwind the industry is enjoying, First Ship Lease Trust has not been able to realize the gains unlike its industry peers.

What does this mean?

First Ship Lease Trust’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that incur net loss is always hard to predict what will occur going forward, and when. The most valuable step is to assess company-specific issues First Ship Lease Trust may be facing and whether management guidance has steadily been met in the past. I recommend you continue to research First Ship Lease Trust to get a more holistic view of the stock by looking at the areas below. Just a heads up – to access some parts of the Simply Wall St research tool you might be asked to create a free account, but it takes just one click and the information they provide is definitely worth it in my opinion.