Did Azumah Resources Limited’s (ASX:AZM) Earnings Growth Outperform The Industry?
Assessing Azumah Resources Limited’s (ASX:AZM) performance as a company requires looking at more than just a years’ earnings data. Below, I will run you through a simple sense check to build perspective on how Azumah Resources is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its metals and mining industry peers. See our latest analysis for Azumah Resources
Commentary On AZM’s Past Performance
I 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 blend enables me to analyze many different companies on a similar basis, using the latest information. For Azumah Resources, its most recent trailing-twelve-month earnings is -AU$3.49M, which, in comparison to the prior year’s figure, has become less negative. Given that these values may be somewhat short-term, I’ve calculated an annualized five-year figure for AZM’s net income, which stands at -AU$11.66M. This suggests that, although net income is negative, it has become less negative over the years.
We can further examine Azumah 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 Azumah Resources has seen an annual decline in revenue of -51.37%, 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 15.35% over the past twelve months, and 13.19% over the past five years. This suggests that any tailwind the industry is deriving benefit from, Azumah Resources has not been able to realize the gains unlike 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 difficult to forecast what will occur going forward, and when. The most insightful step is to assess company-specific issues Azumah Resources may be facing and whether management guidance has consistently been met in the past. I recommend you continue to research Azumah Resources to get a better picture of the stock by looking at:
1. Financial Health: Is AZM’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.
