Today I will take a look at Broken Hill Prospecting Limited’s (ASX:BPL) most recent earnings update (31 December 2017) and compare these latest figures against its performance over the past few years, as well as how the rest of the metals and mining industry performed. As an investor, I find it beneficial to assess BPL’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time. See our latest analysis for Broken Hill Prospecting
How BPL fared against its long-term earnings performance and its industry
I look at 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 blend allows me to assess different stocks in a uniform manner using the most relevant data points. For Broken Hill Prospecting, its most recent earnings (trailing twelve month) is -AU$308.94K, which, in comparison to last year’s figure, has become less negative. Since these values are relatively short-term thinking, I have estimated an annualized five-year figure for Broken Hill Prospecting’s earnings, which stands at -AU$730.38K. This means that, despite the fact that net income is negative, it has become less negative over the years.We can further assess Broken Hill Prospecting’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Broken Hill Prospecting’s top-line has risen by 27.02% on average, signalling that the company is in a high-growth period with expenses shooting ahead of revenues, leading to annual losses. Scanning growth from a sector-level, the Australian metals and mining industry has been growing its average earnings by double-digit 15.45% over the previous year, and 13.22% over the previous five years. This means though Broken Hill Prospecting is presently unprofitable, it may have gained from industry tailwinds, moving earnings in the right direction.
What does this mean?
While past data is useful, it doesn’t tell the whole story. With companies that are currently loss-making, it is always hard to envisage what will occur going forward, and when. The most insightful step is to examine company-specific issues Broken Hill Prospecting may be facing and whether management guidance has consistently been met in the past. I recommend you continue to research Broken Hill Prospecting to get a more holistic view of the stock by looking at:
- 1. Financial Health: Is BPL’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.
- 2. 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.