With A 91.5% Earnings Drop Lately, Did Hawkstone Mining Limited (ASX:HWK) Underperform Its Industry?

Measuring Hawkstone Mining Limited's (ASX:HWK) track record of past performance is a valuable exercise for investors. It allows us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess HWK's recent performance announced on 30 June 2017 and compare these figures to its historical trend and industry movements. View our latest analysis for Hawkstone Mining

How Did HWK's Recent Performance Stack Up Against Its Past?

To account for any quarterly or half-yearly updates, I use the ‘latest twelve-month’ data, 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 method enables me to analyze different stocks on a more comparable basis, using the most relevant data points. For Hawkstone Mining, its most recent bottom-line is -A$1.0M, which, in comparison to last year’s figure, has become more negative. Since these figures are somewhat short-term thinking, I have determined an annualized five-year figure for HWK's net income, which stands at -A$6.7M. This shows that, even though net income is negative, it has become less negative over the years.

We can further assess Hawkstone Mining's loss by researching what has been happening in the industry as well as within the company. Firstly, I want to briefly look into the line items. Revenue growth over the past couple of years has been negative at -53.53%. The key to profitability here is to make sure the company’s cost growth is well-managed. Viewing 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 year, and a substantial 11.48% over the previous few years. This shows that any tailwind the industry is enjoying, Hawkstone Mining has not been able to leverage it as much as its industry peers.

What does this mean?

Though Hawkstone Mining's past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always hard to predict what will occur going forward, and when. The most insightful step is to assess company-specific issues Hawkstone Mining may be facing and whether management guidance has consistently been met in the past. I suggest you continue to research Hawkstone Mining to get a better picture of the stock by looking at:

1. Financial Health: Is HWK’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 last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. 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.