Did Amedeo Resources Plc’s (LON:AMED) Earnings Growth Outperform The Industry?
In this commentary, I will examine Amedeo Resources Plc’s (AIM:AMED) latest earnings update (30 June 2017) and compare these figures against its performance over the past couple of years, as well as how the rest of the capital markets industry performed. As an investor, I find it beneficial to assess AMED’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time. View our latest analysis for Amedeo Resources
Commentary On AMED’s Past Performance
I like to use the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This technique enables me to examine different stocks on a more comparable basis, using the latest information. For Amedeo Resources, its most recent bottom-line (trailing twelve month) is -US$1.97M, which compared to the previous year’s figure, has become less negative. Since these values may be relatively short-term, I’ve computed an annualized five-year value for Amedeo Resources’s net income, which stands at -US$1.50M. This means Amedeo Resources has historically performed better than recently, despite the fact that it seems like earnings are now heading back towards to right direction again.
We can further examine Amedeo Resources’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Amedeo Resources’s top-line has grown by 25.03% on average, indicating that the company is in a high-growth period with expenses shooting ahead of revenues, leading to annual losses. Scanning growth from a sector-level, the UK capital markets industry has been growing its average earnings by double-digit 23.46% in the past year, and 14.13% over the last five years. This shows that any tailwind the industry is enjoying, Amedeo Resources has not been able to gain as much as its industry peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. With companies that are currently loss-making, it is always hard to envisage what will occur going forward, and when. The most valuable step is to examine company-specific issues Amedeo Resources may be facing and whether management guidance has dependably been met in the past. You should continue to research Amedeo Resources to get a more holistic view of the stock by looking at:
1. Financial Health: Is AMED’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 June 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.
