Assessing Great Lakes Graphite Inc’s (TSXV:GLK) past track record of performance is a valuable exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess GLK’s recent performance announced on 31 October 2017 and evaluate these figures to its longer term trend and industry movements. View our latest analysis for Great Lakes Graphite
Was GLK’s weak performance lately a part of a long-term decline?
I like to use the ‘latest twelve-month’ data, 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 allows me to examine different stocks on a more comparable basis, using the latest information. For Great Lakes Graphite, its most recent bottom-line (trailing twelve month) is -CA$6.08M, which, in comparison to last year’s figure, has become more negative. Given that these figures are fairly short-term thinking, I have computed an annualized five-year figure for Great Lakes Graphite’s earnings, which stands at -CA$1.58M. This doesn’t seem to paint a better picture, since earnings seem to have consistently been getting more and more negative over time.We can further analyze Great Lakes Graphite’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Great Lakes Graphite’s top-line has risen by 79.82% on average, indicating that the company is in a high-growth phase with expenses racing ahead revenues, leading to annual losses. Scanning growth from a sector-level, the Canadian metals and mining industry has been growing its average earnings by double-digit 27.28% in the prior year, and 16.37% over the past five. This shows that any tailwind the industry is benefiting from, Great Lakes Graphite has not been able to realize the gains unlike its average peer.
What does this mean?
Though Great Lakes Graphite’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always hard to forecast what will happen in the future and when. The most valuable step is to assess company-specific issues Great Lakes Graphite may be facing and whether management guidance has regularly been met in the past. I suggest you continue to research Great Lakes Graphite to get a better picture of the stock by looking at:
- 1. Financial Health: Is GLK’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.