Did Globe Metals & Mining Limited’s (ASX:GBE) Recent Earnings Growth Beat The Trend?
Understanding how Globe Metals & Mining Limited (ASX:GBE) is performing as a company requires looking at more than just a years’ earnings. Today I will run you through a basic sense check to gain perspective on how Globe Metals & Mining is doing by comparing its latest earnings with its long-term trend as well as the performance of its metals and mining industry peers. View our latest analysis for Globe Metals & Mining
Commentary On GBE’s Past Performance
To account for any quarterly or half-yearly updates, I use data from the most recent 12 months, 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 technique allows me to analyze various companies on a more comparable basis, using the most relevant data points. For Globe Metals & Mining, the most recent earnings -A$1.7M, which compared to the prior year’s figure, has become less negative. Given that these values may be somewhat nearsighted, I’ve computed an annualized five-year value for GBE’s earnings, which stands at -A$5.3M. This shows that, despite the fact that net income is negative, it has become less negative over the years.
We can further examine Globe Metals & Mining’s loss by researching what’s going on in the industry on top of within the company. Firstly, I want to briefly look into the line items. Revenue growth over last couple of years has been negative at -39.02%. The key to profitability here is to make sure the company’s cost growth is well-managed. Viewing growth from a sector-level, the Australian metals and mining industry has been growing, albeit, at a unexciting single-digit rate of 6.76% over the previous twelve months, and a substantial 11.62% over the previous five years. This suggests that, although Globe Metals & Mining is currently loss-making, it may have been aided by industry tailwinds, moving earnings in the right direction.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that incur net loss is always hard to envisage what will happen in the future and when. The most useful step is to assess company-specific issues Globe Metals & Mining may be facing and whether management guidance has consistently been met in the past. You should continue to research Globe Metals & Mining to get a better picture of the stock by looking at:
1. Financial Health: Is GBE’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.
