Blenheim Natural Resources plc (LON:BNR): Should The Recent Earnings Drop Worry You?
When Blenheim Natural Resources plc (AIM:BNR) announced its most recent earnings (30 September 2017), I did two things: looked at its past earnings track record, then look at what is happening in the industry. Understanding how Blenheim Natural Resources performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see BNR has performed. See our latest analysis for Blenheim Natural Resources
How Well Did BNR Perform?
For the most up-to-date info, I 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 allows me to analyze different stocks on a more comparable basis, using the latest information. For Blenheim Natural Resources, its latest earnings is -£0.4M, which, relative to the previous year’s level, has become more negative. Given that these values are relatively myopic, I have computed an annualized five-year value for BNR’s net income, which stands at -£0.2M. This doesn’t seem to paint a better picture, as earnings seem to have steadily been getting more and more negative over time.
We can further evaluate Blenheim Natural Resources’s loss by looking at what’s going on in the industry as well as within the company. First, I want to quickly look into the line items. Revenue growth over the last couple of years has been negative at -25.85%. The key to profitability here is to make sure the company’s cost growth is well-controlled. Scanning growth from a sector-level, the UK metals and mining industry has been growing its average earnings by double-digit 36.65% in the prior twelve months, . This is a change from a volatile drop of -7.59% in the previous few years. This shows that any tailwind the industry is profiting from, Blenheim Natural Resources has not been able to realize the gains unlike its industry peers.
What does this mean?
Though Blenheim Natural Resources’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always hard to envisage what will occur going forward, and when. The most valuable step is to assess company-specific issues Blenheim Natural Resources may be facing and whether management guidance has steadily been met in the past. I suggest you continue to research Blenheim Natural Resources to get a more holistic view of the stock by looking at:
1. Financial Health: Is BNR’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.
