Assessing SandRidge Mississippian Trust I’s (NYSE:SDT) past track record of performance is a useful exercise for investors. It allows us to understand whether the company has met or exceed expectations, which is a great indicator for future performance. Below, I assess SDT’s latest performance announced on 30 September 2017 and evaluate these figures to its historical trend and industry movements. Check out our latest analysis for SandRidge Mississippian Trust I

Was SDT weak performance lately part of a long-term decline?

For the most up-to-date info, I use the ‘latest twelve-month’ data, 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 blend allows me to assess various companies on a more comparable basis, using the latest information. For SandRidge Mississippian Trust I, its most recent bottom-line (trailing twelve month) is US$6.35M, which, against last year’s level, has taken a dive by a significant -71.48%. Given that these values are relatively short-term thinking, I have created an annualized five-year value for SDT’s net income, which stands at US$42.96M This doesn’t seem to paint a better picture, as earnings seem to have steadily been declining over time.

Why is this? Well, let’s look at what’s occurring with margins and whether the entire industry is feeling the heat. Over the last few years, SandRidge Mississippian Trust I has, on average, delivered negative top- and bottom-line growth. As revenues dropped by more, expenses have been lowered in order to maintain margins – not the most sustainable operating activity. Scanning growth from a sector-level, the US oil and gas industry has been growing its average earnings by double-digit 20.21% over the prior year, . This is a change from a volatile drop of -8.11% in the past few years. This suggests that, in the recent industry expansion, SandRidge Mississippian Trust I has not been able to gain as much as its industry peers.

What does this mean?

SandRidge Mississippian Trust I’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Typically companies that endure an extended period of reduction in earnings are going through some sort of reinvestment phase in order to keep up with the recent industry disruption and growth. I recommend you continue to research SandRidge Mississippian Trust I to get a more holistic view of the stock by looking at: