With 83% Earnings Growth Lately, Did Enterprise Metals Limited (ASX:ENT) Outperform The Industry?
For long-term investors, assessing earnings trend over time and against industry benchmarks is more beneficial than examining a single earnings announcement at a point in time. Investors may find my commentary, albeit very high-level and brief, on Enterprise Metals Limited (ASX:ENT) useful as an attempt to give more color around how Enterprise Metals is currently performing. Check out our latest analysis for Enterprise Metals
Could ENT beat the long-term trend and outperform its industry?
I like to use the ‘latest twelve-month’ data, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This blend allows me to examine different stocks on a similar basis, using the most relevant data points. Enterprise Metals’s latest earnings -A$0.5M, which, in comparison to the prior year’s level, has become less negative. Since these values may be somewhat short-term thinking, I have determined an annualized five-year value for Enterprise Metals’s earnings, which stands at -A$4.1M. This shows that, though net income is negative, it has become less negative over the years.
Additionally, we can examine Enterprise Metals’s loss by looking at what’s going on in the industry on top of within the company. First, I want to quickly look into the line items. Revenue growth over last couple of years has grew by 42.17%, signalling that Enterprise Metals is in a high-growth phase with expenses shooting ahead of high top-line growth rates. Looking at growth from a sector-level, the Australian metals and mining industry has been growing, albeit, at a unexciting single-digit rate of 6.76% in the previous twelve months, and a substantial 11.62% over the past couple of years. This means despite the fact that Enterprise Metals is currently loss-making, it may have gained from industry tailwinds, moving earnings into a more favorable position.
What does this mean?
Enterprise Metals’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 predict what will happen in the future and when. The most valuable step is to examine company-specific issues Enterprise Metals may be facing and whether management guidance has regularly been met in the past. You should continue to research Enterprise Metals to get a better picture of the stock by looking at:
1. Financial Health: Is ENT’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.
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.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
