Measuring Metals Exploration Plc’s (AIM:MTL) track record of past performance is a useful exercise for investors. It enables us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess MTL’s recent performance announced on 30 June 2017 and weigh these figures against its long-term trend and industry movements. See our latest analysis for Metals Exploration
Was MTL weak performance lately part of a long-term decline?
I prefer 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 enables me to examine different companies on a similar basis, using new information. For Metals Exploration, its most recent trailing-twelve-month earnings is -UK£15.41M, which, relative to the previous year’s level, has become more negative. Given that these figures are somewhat short-term thinking, I’ve determined an annualized five-year figure for Metals Exploration’s net income, which stands at -UK£6.41M. This doesn’t seem to paint a better picture, as earnings seem to have consistently been getting more and more negative over time.We can further examine Metals Exploration’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Metals Exploration’s top-line more than doubled on average, implying that the business is in a high-growth period with expenses shooting ahead of revenues, leading to annual losses. Inspecting growth from a sector-level, the UK metals and mining industry has been growing its average earnings by double-digit 43.31% in the prior year, . This is a change from a volatile drop of -8.02% in the previous couple of years. This means any tailwind the industry is profiting from, Metals Exploration has not been able to realize the gains unlike its industry peers.
What does this mean?
Though Metals Exploration’s past data is helpful, it is only one aspect of my investment thesis. 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 examine company-specific issues Metals Exploration may be facing and whether management guidance has consistently been met in the past. I recommend you continue to research Metals Exploration to get a more holistic view of the stock by looking at:
- 1. Financial Health: Is MTL’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.