When EVRAZ plc (LSE:EVR) released its most recent earnings update (30 June 2017), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well EVRAZ has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I’ve summarized the key takeaways on how I see EVR has performed. See our latest analysis for EVR
How EVR fared against its long-term earnings performance and its industry
I 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 more comparable basis, using the most relevant data points. EVRAZ’s most recent earnings -$158.0M, which, relative to the previous year’s level, has become less negative. Since these values may be somewhat nearsighted, I have determined an annualized five-year figure for EVR’s earnings, which stands at -$309.0M. This suggests that, while net income is negative, it has become less negative over the years.Additionally, we can assess EVRAZ’s loss by looking at what has been happening in the industry along with within the company. First, I want to quickly look into the line items. Revenue growth over past few years has been negative at -10.67%. The key to profitability here is to make sure the company’s cost growth is well-managed. Eyeballing growth from a sector-level, the UK metals and mining industry has been growing its average earnings by double-digit 36.65% over the past twelve months, . This is a change from a volatile drop of -7.59% in the previous few years. This means that, while EVRAZ is currently unprofitable, it may have only just benefited from the recent industry expansion, moving earnings into a more favorable position.
What does this mean?
Though EVRAZ’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always difficult to envisage what will happen in the future and when. The most useful step is to assess company-specific issues EVRAZ may be facing and whether management guidance has steadily been met in the past. You should continue to research EVRAZ to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for EVR’s future growth? Take a look at our free research report of analyst consensus for EVR’s outlook.
2. Financial Health: Is EVR’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.