Interested In Resource Mining Corporation Limited (ASX:RMI)? Here's What Its Recent Track-Record Looks Like

After reading Resource Mining Corporation Limited's (ASX:RMI) latest earnings update (30 June 2017), I found it beneficial to look back at how the company has performed in the past and compare this against the most recent numbers. As a long-term investor I tend to pay attention to earnings trend, rather than a single number at one point in time. I also like to compare against an industry benchmark to understand whether RMI has outperformed, or whether it is simply riding an industry wave. Below is a brief commentary on my key takeaways. See our latest analysis for RMI

Did RMI's recent EPS Growth beat the long-term trend and the industry?

I use data from the most recent 12 months, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This method allows me to analyze various companies on a similar basis, using the latest information. Resource Mining's most recent bottom-line -A$0.7M, which, relative to the prior year's figure, has become less negative. Since these figures may be fairly nearsighted, I’ve computed an annualized five-year value for RMI's net income, which stands at -A$1.3M. This means even though net income is negative, it has become less negative over the years.

Additionally, we can analyze Resource Mining's loss by researching what has been happening in the industry as well as within the company. First, I want to briefly look into the line items. Revenue growth over past couple of years has been negative at -17.34%. The key to profitability here is to make sure the company’s cost growth is well-controlled. Scanning growth from a sector-level, the Australian metals and mining industry has been growing, albeit, at a muted single-digit rate of 6.76% in the previous year, and a substantial 10.06% over the past five. This shows that, though Resource Mining is presently loss-making, it may have been aided by industry tailwinds, moving earnings into a more favorable position.

What does this mean?

Though Resource 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 difficult to envisage what will happen in the future and when. The most insightful step is to assess company-specific issues Resource Mining may be facing and whether management guidance has regularly been met in the past. You should continue to research Resource Mining to get a better picture of the stock by looking at:

1. Financial Health: Is RMI’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.