After reading Antilles Oil and Gas NL’s (ASX:AVD) latest earnings update (30 June 2017), 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 AVD has outperformed, or whether it is simply riding an industry wave. Below is a brief commentary on my key takeaways. View our latest analysis for Antilles Oil and Gas

How AVD fared against its long-term earnings performance and its industry

I look at 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 allows me to analyze different companies on a more comparable basis, using new information. For Antilles Oil and Gas, its most recent trailing-twelve-month earnings is -AU$1.61M, which, in comparison to last year’s figure, has become less negative. Given that these values may be somewhat short-term thinking, I’ve computed an annualized five-year value for AVD’s earnings, which stands at -AU$1.82M. This shows that, despite the fact that net income is negative, it has become less negative over the years.

We can further evaluate Antilles Oil and Gas’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Antilles Oil and Gas’s top-line has grown by 64.23% on average, implying that the company is in a high-growth phase with expenses shooting ahead of revenues, leading to annual losses. Looking at growth from a sector-level, the Australian oil and gas industry has been amplifying growth, more than doubling average earnings in the past year, and a more muted 9.50% over the past five years. This shows that whatever uplift the industry is profiting from, Antilles Oil and Gas has not been able to realize the gains unlike its industry peers.

What does this mean?

Though Antilles Oil and Gas’s past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always hard to forecast what will occur going forward, and when. The most insightful step is to assess company-specific issues Antilles Oil and Gas may be facing and whether management guidance has dependably been met in the past. You should continue to research Antilles Oil and Gas to get a better picture 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.

• 1. Financial Health: Is AVD’s operations financially sustainable? Balance sheets can be hard to analyze, which is why Simply Wall St does it for you. Check out important financial health checks here.

• 2. Valuation: What is AVD worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in this free research report helps visualize whether AVD is currently mispriced by the market.

• 3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore a free list of these great stocks here.

NB: Figures in this article are calculated using data from the trailing twelve months from 30 June 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.