Does Resolute Mining Limited's (ASX:RSG) -3.9% EPS Growth Reflect The Long-Term Trend?

Assessing Resolute Mining Limited's (ASX:RSG) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess RSG's recent performance announced on 30 June 2017 and evaluate these figures to its long-term trend and industry movements. See our latest analysis for RSG

Were RSG's earnings stronger than its past performances and the industry?

To account for any quarterly or half-yearly updates, 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 technique enables me to analyze different stocks in a uniform manner using new information. For Resolute Mining, the most recent twelve-month earnings is A$136.4M, which, relative to the previous year's figure, has increased by a relatively muted 7.22%. Given that these values are fairly nearsighted, I have calculated an annualized five-year figure for RSG's earnings, which stands at -A$8.6M. This means that, generally, Resolute Mining has been able to increasingly raise its earnings over the past couple of years as well.

How has it been able to do this? Well, let’s take a look at whether it is merely attributable to an industry uplift, or if Resolute Mining has experienced some company-specific growth. Although both top-line and bottom-line growth rates in the last couple of years, were, on average, negative, earnings were more so. While this brought about a margin contraction, it has cushioned Resolute Mining's earnings contraction. Eyeballing growth from a sector-level, the Australian metals and mining industry has been growing, albeit, at a unexciting single-digit rate of 6.76% over the previous year, and a substantial 10.06% over the previous five years. This suggests that any tailwind the industry is enjoying, Resolute Mining is capable of leveraging this to its advantage.

What does this mean?

While past data is useful, it doesn’t tell the whole story. While Resolute Mining has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. I recommend you continue to research Resolute Mining to get a more holistic view of the stock by looking at:

1. Future Outlook: What are well-informed industry analysts predicting for RSG’s future growth? Take a look at our free research report of analyst consensus for RSG’s outlook.

2. Financial Health: Is RSG’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.

3. 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.