Myanmar Metals Limited's (ASX:MYL) Earnings Dropped -117.15%, Did Its Industry Show Weakness Too?

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

Did MYL perform worse than its track record and industry?

I like to 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 blend allows me to analyze many different companies on a similar basis, using the most relevant data points. For Myanmar Metals, its latest earnings (trailing twelve month) is -AU$8.62M, which compared to the previous year's level, has become more negative. Since these values may be fairly myopic, I’ve created an annualized five-year value for Myanmar Metals's net income, which stands at -AU$2.61M. This doesn’t seem to paint a better picture, as earnings seem to have steadily been getting more and more negative over time.

We can further examine Myanmar Metals's loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Myanmar Metals has seen an annual decline in revenue of -25.38%, 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 15.45% over the past twelve months, and 13.26% over the last five years. This means whatever uplift the industry is enjoying, Myanmar Metals has not been able to leverage it as much as its industry peers.

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 forecast what will occur going forward, and when. The most insightful step is to assess company-specific issues Myanmar Metals may be facing and whether management guidance has regularly been met in the past. I recommend you continue to research Myanmar Metals to get a better picture of the stock by looking at:

1. Financial Health: Is MYL’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.