Want To Invest In Citigold Corporation Limited (ASX:CTO)? Here's How It Performed Lately

Today I will examine Citigold Corporation Limited's (ASX:CTO) latest earnings update (30 June 2017) and compare these figures against its performance over the past couple of years, in addition to how the rest of CTO's industry performed. As a long-term investor, I find it useful to analyze the company's trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time. Check out our latest analysis for Citigold

How CTO fared against its long-term earnings performance and its industry

I prefer 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 blend allows me to examine different stocks on a more comparable basis, using new information. For Citigold, its most recent earnings (trailing twelve month) is -A$6.6M, which, against the previous year's figure, has become less negative. Since these figures may be relatively short-term, I have created an annualized five-year value for CTO's net income, which stands at -A$20.9M. This means although net income is negative, it has become less negative over the years.

We can further examine Citigold's loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Citigold has seen an annual decline in revenue of -48.68%, on average. This adverse movement is a driver of the company's inability to reach breakeven. Has the entire industry experienced this headwind? Scanning growth from a sector-level, the Australian metals and mining industry has been growing, albeit, at a subdued single-digit rate of 7.36% in the prior twelve months, and a substantial 11.48% over the past five. This shows that, even though Citigold is currently unprofitable, it may have been aided by industry tailwinds, moving earnings into a more favorable position.

What does this mean?

While past data is useful, it doesn’t tell the whole story. Companies that incur net loss is always difficult to envisage what will happen in the future and when. The most insightful step is to assess company-specific issues Citigold may be facing and whether management guidance has steadily been met in the past. You should continue to research Citigold to get a more holistic view of the stock by looking at:

• 1. Financial Health: Is CTO’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.

NB: Figures in this article are calculated using data from the trailing twelve months from 30 June 2017. This may not be consistent with full year annual report figures.

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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.