After reading Afritin Mining Limited’s (AIM:ATM) most recent earnings announcement (31 August 2017), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways. See our latest analysis for Afritin Mining
Did ATM perform worse than its track record and industry?
I prefer to use data from the most recent 12 months, 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 technique allows me to analyze different stocks on a more comparable basis, using the latest information. For Afritin Mining, its latest trailing-twelve-month earnings is -UK£227.74K, which, in comparison to last year’s figure, has become more negative. Since these figures are fairly nearsighted, I have created an annualized five-year figure for ATM’s earnings, which stands at -UK£134.44K. 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 Afritin Mining’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Afritin Mining’s top-line has increased by 34.22% on average, signalling that the company is in a high-growth period with expenses shooting ahead of revenues, leading to annual losses. Viewing growth from a sector-level, the UK metals and mining industry has been growing its average earnings by double-digit 31.29% over the past twelve months, . This is a change from a volatile drop of -8.41% in the last couple of years. This suggests that whatever uplift the industry is enjoying, Afritin Mining has not been able to leverage it as much as its industry peers.
What does this mean?
Afritin Mining’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that incur net loss is always hard to forecast what will occur going forward, and when. The most useful step is to assess company-specific issues Afritin Mining may be facing and whether management guidance has steadily been met in the past. I recommend you continue to research Afritin Mining to get a better picture of the stock by looking at:
- 1. Financial Health: Is ATM’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 trailing twelve months from 31 August 2017. 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.