Assessing Australian Vanadium Limited’s (ASX:AVL) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess AVL’s recent performance announced on 31 December 2017 and evaluate these figures to its long-term trend and industry movements. See our latest analysis for Australian Vanadium
Did AVL beat its long-term earnings growth trend and its industry?
For the purpose of this commentary, I like to 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 enables me to assess different stocks on a similar basis, using new information. For Australian Vanadium, its latest trailing-twelve-month earnings is -AU$1.43M, which, in comparison to the prior year’s figure, has become less negative. Given that these figures may be somewhat nearsighted, I have estimated an annualized five-year value for AVL’s net income, which stands at -AU$4.34M. This shows that, even though net income is negative, it has become less negative over the years.
We can further examine Australian Vanadium’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Australian Vanadium has seen an annual decline in revenue of -6.56%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Inspecting growth from a sector-level, the Australian metals and mining industry has been growing its average earnings by double-digit 21.03% over the previous year, and a less exciting 8.68% over the past half a decade. This suggests that any tailwind the industry is enjoying, Australian Vanadium has not been able to reap as much as its average peer.
What does this mean?
Australian Vanadium’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 occur going forward, and when. The most insightful step is to examine company-specific issues Australian Vanadium may be facing and whether management guidance has consistently been met in the past. I recommend you continue to research Australian Vanadium to get a better picture of the stock by looking at:
- Financial Health: Is AVL’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.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 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.