Examining Carpentaria Resources Limited’s (ASX:CAP) past track record of performance is a valuable exercise for investors. It enables us to understand whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess CAP’s latest performance announced on 31 December 2017 and weigh these figures against its longer term trend and industry movements. Check out our latest analysis for Carpentaria Resources
How CAP fared against its long-term earnings performance and its industryCAP is loss-making, with the most recent trailing twelve-month earnings of -AU$980.17k (from 31 December 2017), which compared to last year has become less negative. Furthermore, the company’s loss seem to be growing over time, with the five-year earnings average of -AU$2.42m. Each year, for the past five years CAP has seen an annual decline in revenue of -34.11%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Inspecting growth from a sector-level, the Australian metals and mining industry has been growing its average earnings by double-digit 18.18% over the previous year, and a more subdued 8.68% over the last five years. This means though Carpentaria Resources is currently running a loss, it may have gained from industry tailwinds, moving earnings in the right direction.
Even though Carpentaria Resources is currently unprofitable, it has a sufficient cash cushion (AU$1.75m) to pay for its upcoming operating expenses over the next year. This is a strong indication of good cash management.
What does this mean?
Though Carpentaria Resources’s past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always difficult to forecast what will occur going forward, and when. The most valuable step is to examine company-specific issues Carpentaria Resources may be facing and whether management guidance has steadily 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:
- Financial Health: Is CAP’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.
- 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.