In this article, I will take a look at Open joint stock company Solikamsk magnesium works’s (MISX:MGNZ) most recent earnings update (31 December 2017) and compare these latest figures against its performance over the past few years, along with how the rest of MGNZ’s industry performed. As a long-term investor, I find it useful to analyze the company’s trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time. View our latest analysis for Solikamsk magnesium works
Was MGNZ’s recent earnings decline indicative of a tough track record?
To account for any quarterly or half-yearly updates, I 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 assess different companies on a more comparable basis, using the most relevant data points. For Solikamsk magnesium works, its latest earnings (trailing twelve month) is -RUРУБ299.22M, which, against the previous year’s level, has become more negative. Since these figures may be fairly short-term, I’ve calculated an annualized five-year figure for Solikamsk magnesium works’s net income, which stands at RUРУБ369.27M.We can further analyze Solikamsk magnesium works’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Solikamsk magnesium works’s revenue growth has been relatively subdued, with an annual growth rate of 1.39%, on average. The company’s inability to breakeven has been aided by the relatively flat top-line in the past. Eyeballing growth from a sector-level, the RU metals and mining industry has been growing, albeit, at a muted single-digit rate of 2.40% over the prior year, and a substantial 14.58% over the last five years. This means that whatever near-term headwind the industry is enduring, it’s hitting Solikamsk magnesium works harder than its peers.
What does this mean?
Solikamsk magnesium works’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. With companies that are currently loss-making, it is always difficult to forecast what will occur going forward, and when. The most valuable step is to assess company-specific issues Solikamsk magnesium works may be facing and whether management guidance has steadily been met in the past. You should continue to research Solikamsk magnesium works to get a better picture of the stock by looking at:
- Financial Health: Is MGNZ’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.
- 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.