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Should You Be Content With Aeris Resources Limited’s (ASX:AIS) Earnings Growth?

Today I will examine Aeris Resources Limited’s (ASX:AIS) latest earnings update (30 December 2017) and compare these figures against its performance over the past couple of years, in addition to how the rest of AIS’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 Aeris Resources

How Well Did AIS Perform?

I look at 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 technique allows me to analyze different stocks on a similar basis, using the latest information. For Aeris Resources, its most recent bottom-line (trailing twelve month) is -AU$17.25M, which, against the prior year’s figure, has become less negative. Given that these values are somewhat myopic, I’ve determined an annualized five-year figure for AIS’s earnings, which stands at -AU$48.44M. This means that, despite the fact that net income is negative, it has become less negative over the years.

ASX:AIS Income Statement Mar 18th 18
ASX:AIS Income Statement Mar 18th 18

We can further analyze Aeris Resources’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Aeris Resources has seen an annual decline in revenue of -8.95%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Viewing growth from a sector-level, the Australian metals and mining industry has been growing its average earnings by double-digit 15.45% over the past year, and 13.04% over the past half a decade. This means that, though Aeris Resources is presently running a loss, it may have gained from industry tailwinds, moving earnings towards to right direction.

What does this mean?

Though Aeris Resources’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always hard to forecast what will happen in the future and when. The most insightful step is to examine company-specific issues Aeris Resources may be facing and whether management guidance has steadily been met in the past. I suggest you continue to research Aeris Resources to get a better picture of the stock by looking at:

  • 1. Financial Health: Is AIS’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 30 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.

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