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After reading Marine Petroleum Trust’s (NASDAQ:MARP.S) latest earnings update (31 March 2018), I found it beneficial to look back at how the company has performed in the past and compare this against the most recent numbers. As a long-term investor I tend to pay attention to earnings trend, rather than a single number at one point in time. I also like to compare against an industry benchmark to understand whether MARP.S has outperformed, or whether it is simply riding an industry wave. Below is a brief commentary on my key takeaways. See our latest analysis for Marine Petroleum Trust
Did MARP.S’s recent earnings growth beat the long-term trend and the industry?
I use data from the most recent 12 months, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This enables me to analyze different stocks on a more comparable basis, using the latest information. For Marine Petroleum Trust, its latest trailing-twelve-month earnings is US$764.72K, which compared to the previous year’s figure, has jumped up by 29.07%. Given that these values may be relatively nearsighted, I have computed an annualized five-year figure for MARP.S’s net income, which stands at US$2.14M This shows that, even though earnings increased from last year’s level, over a longer period of time, Marine Petroleum Trust’s earnings have been declining on average.
What could be happening here? Well, let’s take a look at what’s occurring with margins and if the rest of the industry is feeling the heat. Although revenue growth in the last few years, has been negative, earnings growth has been declining by even more, implying that Marine Petroleum Trust has been ramping up its expenses. This harms margins and earnings, and is not a sustainable practice. Eyeballing growth from a sector-level, the US oil and gas industry has been growing its average earnings by double-digit 25.04% in the previous year, . This is a turnaround from a volatile drop of -5.08% in the past couple of years. This means that, in the recent industry expansion, Marine Petroleum Trust is capable of amplifying this to its advantage.
What does this mean?
Though Marine Petroleum Trust’s past data is helpful, it is only one aspect of my investment thesis. Recent positive growth doesn’t necessarily mean it’s onwards and upwards for the company. There may be variables that are affecting the entire industry thus the high industry growth rate over the same time period. You should continue to research Marine Petroleum Trust to get a more holistic view of the stock by looking at: