When Carpentaria Resources Limited (ASX:CAP) released its most recent earnings update (31 December 2017), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were Carpentaria Resources’s average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not CAP actually performed well. Below is a quick commentary on how I see CAP has performed. See our latest analysis for Carpentaria Resources
How Did CAP’s Recent Performance Stack Up Against Its Past?
I like to use data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This method allows me to examine different companies in a uniform manner using new information. For Carpentaria Resources, its most recent trailing-twelve-month earnings is -AU$980.17K, which compared to the prior year’s level, has become less negative. Since these values may be somewhat nearsighted, I’ve determined an annualized five-year figure for Carpentaria Resources’s earnings, which stands at -AU$2.36M. This means that, although net income is negative, it has become less negative over the years.We can further evaluate Carpentaria Resources’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Carpentaria Resources has seen an annual decline in revenue of -38.40%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Eyeballing growth from a sector-level, the Australian metals and mining industry has been growing its average earnings by double-digit 13.86% in the past twelve months, and 13.19% over the past half a decade. This means although Carpentaria Resources is currently unprofitable, it may have gained from industry tailwinds, moving earnings in the right direction.
What does this mean?
Carpentaria Resources’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 forecast what will happen in the future and when. The most valuable step is to examine company-specific issues Carpentaria Resources may be facing and whether management guidance has consistently been met in the past. I suggest you continue to research Carpentaria Resources to get a more holistic view 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 CAP’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. 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.