Understanding Copper Strike Limited’s (ASX:CSE) performance as a company requires examining more than earnings from one point in time. Today I will take you through a basic sense check to gain perspective on how Copper Strike is doing by evaluating its latest earnings with its longer term trend as well as its industry peers’ performance over the same period. See our latest analysis for Copper Strike
Was CSE weak performance lately part of a long-term decline?
To account for any quarterly or half-yearly updates, I use data from the most recent 12 months, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This blend allows me to analyze different companies on a more comparable basis, using new information. For Copper Strike, its most recent bottom-line (trailing twelve month) is -AU$222.19K, which, relative to last year’s figure, has become more negative. Given that these figures are somewhat myopic, I have created an annualized five-year value for Copper Strike’s earnings, which stands at -AU$52.37K. This doesn’t seem to paint a better picture, since earnings seem to have consistently been getting more and more negative over time.We can further evaluate Copper Strike’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Copper Strike has seen an annual decline in revenue of -33.60%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Viewing growth from a sector-level, the Australian metals and mining industry has been growing its average earnings by double-digit 13.86% in the previous year, and 12.96% over the last five years. This means whatever tailwind the industry is profiting from, Copper Strike has not been able to realize the gains unlike its average peer.
What does this mean?
Though Copper Strike’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 envisage what will occur going forward, and when. The most insightful step is to examine company-specific issues Copper Strike may be facing and whether management guidance has regularly been met in the past. I recommend you continue to research Copper Strike 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 CSE’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.