Based on the key profitability measurements obtained from Topaz Energy's financial statements, Topaz Energy Corp may not be well positioned to generate adequate gross income at this time. It has a very high risk of underperforming in December. Profitability indicators assess Topaz Energy's ability to earn profits and add value for shareholders.
For Topaz Energy profitability analysis, we use financial ratios and fundamental drivers that measure the ability of Topaz Energy to generate income relative to revenue, assets, operating costs, and current equity. These fundamental indicators attest to how well Topaz Energy Corp utilizes its assets to generate profit and value for its shareholders. The profitability module also shows relationships between Topaz Energy's most relevant fundamental drivers. It provides multiple suggestions of what could affect the performance of Topaz Energy Corp over time as well as its relative position and ranking within its peers.
Please note, there is a significant difference between Topaz Energy's value and its price as these two are different measures arrived at by different means. Investors typically determine if Topaz Energy is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Topaz Energy's price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.
Topaz Energy Corp Return On Equity vs. Operating Margin Fundamental Analysis
Comparative valuation techniques use various fundamental indicators to help in determining Topaz Energy's current stock value. Our valuation model uses many indicators to compare Topaz Energy value to that of its competitors to determine the firm's financial worth.
Topaz Energy Corp is rated fifth in operating margin category among its peers. It is rated below average in return on equity category among its peers reporting about 0.11 of Return On Equity per Operating Margin. The ratio of Operating Margin to Return On Equity for Topaz Energy Corp is roughly 8.81 . At this time, Topaz Energy's Operating Profit Margin is very stable compared to the past year. Comparative valuation analysis is a catch-all model that can be used if you cannot value Topaz Energy by discounting back its dividends or cash flows. This model doesn't attempt to find an intrinsic value for Topaz Energy's Stock. Still, instead, it compares the stock's price multiples to a benchmark or nearest competition to determine if the stock is relatively undervalued or overvalued.
Topaz Return On Equity vs. Operating Margin
Operating Margin shows how much operating income a company makes on each dollar of sales. It is one of the profitability indicators which helps analysts to understand whether the firm is successful or not making money from everyday operations.
Topaz Energy
Operating Margin
=
Operating Income
Revenue
X
100
=
0.45 %
A good Operating Margin is required for a company to be able to pay for its fixed costs or payout its debt, which implies that the higher the margin, the better. This ratio is most effective in evaluating the earning potential of a company over time when comparing it against a firm's competitors.
Return on Equity or ROE tells company stockholders how effectually their money is being utilized or reinvested. It is a useful ratio when analyzing company profitability or the management effectiveness given the capital invested by the shareholders. ROE shows how efficiently a company utilizes investments to generate income.
Topaz Energy
Return On Equity
=
Net Income
Total Equity
=
0.051
For most industries, Return on Equity between 10% and 30% are considered desirable to provide dividends to owners and have funds for the future growth of the company. Investors should be very careful using ROE as the only efficiency indicator because ROE can be high if a company is heavily leveraged.
Topaz Return On Equity Comparison
Topaz Energy is currently under evaluation in return on equity category among its peers.
Topaz Energy Profitability Projections
The most important aspect of a successful company is its ability to generate a profit. For investors in Topaz Energy, profitability is also one of the essential criteria for including it into their portfolios because, without profit, Topaz Energy will eventually generate negative long term returns. The profitability progress is the general direction of Topaz Energy's change in net profit over the period of time. It can combine multiple indicators of Topaz Energy, where stable trends show no significant progress. An accelerating trend is seen as positive, while a decreasing one is unfavorable. A rising trend means that profits are rising, and operational efficiency may be rising as well. A decreasing trend is a sign of poor performance and may indicate upcoming losses.
Profitability drivers are factors that can directly affect your investment outlook on Topaz Energy. Investors often realize that things won't turn out the way they predict. There are maybe way too many unforeseen events and contingencies during the holding period of Topaz Energy position where the market behavior may be hard to predict, tax policy changes, gold or oil price hikes, calamities change, and many others. The question is, are you prepared for these unexpected events? Although some of these situations are obviously beyond your control, you can still follow the important profit indicators to know where you should focus on when things like this occur. Below are some of the Topaz Energy's important profitability drivers and their relationship over time.
One of the main advantages of trading using pair correlations is that every trade hedges away some risk. Because there are two separate transactions required, even if Topaz Energy position performs unexpectedly, the other equity can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Topaz Energy will appreciate offsetting losses from the drop in the long position's value.
Topaz Energy Pair Trading
Topaz Energy Corp Pair Trading Analysis
The ability to find closely correlated positions to Topaz Energy could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace Topaz Energy when you sell it. If you don't do this, your portfolio allocation will be skewed against your target asset allocation. So, investors can't just sell and buy back Topaz Energy - that would be a violation of the tax code under the "wash sale" rule, and this is why you need to find a similar enough asset and use the proceeds from selling Topaz Energy Corp to buy it.
The correlation of Topaz Energy is a statistical measure of how it moves in relation to other instruments. This measure is expressed in what is known as the correlation coefficient, which ranges between -1 and +1. A perfect positive correlation (i.e., a correlation coefficient of +1) implies that as Topaz Energy moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if Topaz Energy Corp moves in either direction, the perfectly negatively correlated security will move in the opposite direction. If the correlation is 0, the equities are not correlated; they are entirely random. A correlation greater than 0.8 is generally described as strong, whereas a correlation less than 0.5 is generally considered weak.
Correlation analysis and pair trading evaluation for Topaz Energy can also be used as hedging techniques within a particular sector or industry or even over random equities to generate a better risk-adjusted return on your portfolios.
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To fully project Topaz Energy's future profitability, investors should examine all historical financial statements. These statements provide investors with a comprehensive snapshot of the financial position of Topaz Energy Corp at a specified time, usually calculated after every quarter, six months, or one year. Three primary documents fall into the category of financial statements. These documents include Topaz Energy's income statement, its balance sheet, and the statement of cash flows.
Potential Topaz Energy investors and stakeholders can use historical trends found within financial statements to determine how well the company is positioned for the future. Although Topaz Energy investors may work on each financial statement separately, they are all related. The changes in Topaz Energy's assets and liabilities, for example, are also reflected in the revenues and expenses that we see on Topaz Energy's income statement, which results in the company's gains or losses. Cash flows can provide more information regarding cash listed on a balance sheet but not equivalent to net income shown on the income statement. Please read more on our technical analysis and fundamental analysis pages.
