Today I will examine BW LPG Limited’s (OB:BWLPG) latest earnings update (31 March 2018) and compare these figures against its performance over the past couple of years, in addition to how the rest of BWLPG’s industry performed. As a long-term investor, I find it useful to analyze the company’s trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time. See our latest analysis for BWG

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

To account for any quarterly or half-yearly updates, I use the ‘latest twelve-month’ data, 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 enables me to examine various companies on a similar basis, using the latest information. For BWG, its most recent bottom-line (trailing twelve month) is -US$59.02M, which compared to last year’s level, has become more negative. Since these values may be fairly short-term, I’ve created an annualized five-year figure for BWG’s earnings, which stands at US$117.48M.

We can further examine BWG’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years BWG’s top-line has increased by a mere 5.54%, on average. The company’s inability to breakeven has been aided by the relatively flat top-line in the past. Scanning growth from a sector-level, the NO oil and gas industry has been multiplying growth, more than doubling average earnings over the previous twelve months, and a flatter 0.73% over the past five. This suggests that whatever uplift the industry is profiting from, BWG has not been able to gain as much as its average peer.

What does this mean?

BWG’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 difficult to predict what will occur going forward, and when. The most insightful step is to assess company-specific issues BWG may be facing and whether management guidance has consistently been met in the past. I recommend you continue to research BWG to get a better picture of the stock by looking at:

1. Future Outlook: What are well-informed industry analysts predicting for BWLPG’s future growth? Take a look at our free research report of analyst consensus for BWLPG’s outlook.

2. Financial Health: Is BWLPG’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.

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 March 2018. 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.