The recent earnings report of Ranger Energy Services, Inc. (NYSE:RNGR) may have disappointed investors in terms of profit numbers, but there are promising signs that suggest a brighter future for the company. One key measure to consider is the accrual ratio, which compares a company’s free cash flow to its profit. A negative accrual ratio indicates that the company is generating more free cash flow than its profit would suggest, which is a positive sign.
In the case of Ranger Energy Services, the company had an accrual ratio of -0.14 for the year ending September 2024. This means that its free cash flow of US$52m exceeded its statutory profit of US$14.7m by a significant margin. This improvement in free cash flow is certainly welcomed by shareholders and indicates the potential for strong earnings in the future.
However, it is important to note that while the company’s free cash flow has improved, its earnings per share have actually declined over the past year. This highlights the need to consider other factors when assessing the company’s profitability. It is always advisable to be aware of the risks associated with investing in a stock, as there may be factors that could impact its performance.
In conclusion, while Ranger Energy Services’ statutory earnings may not accurately reflect its full potential, the positive accrual ratio and improved free cash flow provide a more optimistic outlook. Investors should conduct comprehensive analysis and consider various factors before making any investment decisions.
FAQ:
1. What is the accrual ratio and why is it important?
The accrual ratio compares a company’s free cash flow to its profit. A negative accrual ratio indicates that the company is generating more free cash flow than its profit would suggest, which is a positive sign.
2. What was Ranger Energy Services’ accrual ratio for the year ending September 2024?
Ranger Energy Services had an accrual ratio of -0.14 for the year ending September 2024.
3. What does a negative accrual ratio indicate?
A negative accrual ratio indicates that the company is generating more free cash flow than its profit would suggest, which is a positive sign.
4. Did Ranger Energy Services’ free cash flow improve?
Yes, Ranger Energy Services’ free cash flow improved, with a significant margin of US$52m exceeding its statutory profit of US$14.7m.
5. Did Ranger Energy Services’ earnings per share decline?
Yes, Ranger Energy Services’ earnings per share declined over the past year.
6. Should investors consider factors other than earnings when assessing the company’s profitability?
Yes, it is important to consider other factors when assessing a company’s profitability. Earnings alone may not accurately reflect the company’s full potential.
Related Links:
– Ranger Energy Services website
