Does Maximus Resources Limited's (ASX:MXR) Earnings Growth Make It An Outperformer?

For investors with a long-term horizon, assessing earnings trend over time and against industry benchmarks is more valuable than looking at a single earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on Maximus Resources Limited (ASX:MXR) useful as an attempt to give more color around how Maximus Resources is currently performing. See our latest analysis for Maximus Resources

Did MXR's recent earnings growth beat the long-term trend and the industry?

To account for any quarterly or half-yearly updates, I use the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This technique enables me to analyze different stocks on a more comparable basis, using the latest information. For Maximus Resources, its latest earnings (trailing twelve month) is -AU$937.89K, which, against last year’s figure, has become less negative. Given that these values may be relatively short-term, I have estimated an annualized five-year figure for Maximus Resources's earnings, which stands at -AU$2.57M. This means although net income is negative, it has become less negative over the years.

We can further examine Maximus Resources's loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Maximus Resources's top-line has grown by 56.96% on average, indicating that the company is in a high-growth period with expenses shooting ahead of revenues, leading to annual losses. Looking at growth from a sector-level, the Australian metals and mining industry has been growing its average earnings by double-digit 15.45% over the past year, and 13.17% over the past five. This means although Maximus Resources is currently unprofitable, it may have benefited from industry tailwinds, moving earnings in the right direction.

What does this mean?

While past data is useful, it doesn’t tell the whole story. 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 examine company-specific issues Maximus Resources may be facing and whether management guidance has consistently been met in the past. I suggest you continue to research Maximus Resources to get a more holistic view of the stock by looking at:

• 1. Financial Health: Is MXR’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 31 December 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.