Did Jameson Resources Limited’s (ASX:JAL) Earnings Growth Outperform The Industry?
In this commentary, I will examine Jameson Resources Limited’s (ASX:JAL) latest earnings update (31 December 2017) and compare these figures against its performance over the past couple of years, as well as how the rest of the metals and mining industry performed. As an investor, I find it beneficial to assess JAL’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 Jameson Resources
Commentary On JAL’s Past Performance
I 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 allows me to examine different stocks in a uniform manner using the most relevant data points. For Jameson Resources, its most recent trailing-twelve-month earnings is -AU$743.38K, which, relative to the previous year’s level, has become less negative. Given that these values may be fairly short-term thinking, I’ve calculated an annualized five-year value for JAL’s net income, which stands at -AU$1.90M. This means despite the fact that net income is negative, it has become less negative over the years.
We can further assess Jameson Resources’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Jameson Resources has seen an annual decline in revenue of -35.11%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Scanning growth from a sector-level, the Australian metals and mining industry has been growing its average earnings by double-digit 18.18% in the past twelve months, and a more muted 8.68% over the last five years. This means that, even though Jameson Resources is currently running a loss, it may have been aided by industry tailwinds, moving earnings towards to 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 forecast what will occur going forward, and when. The most valuable step is to assess company-specific issues Jameson Resources may be facing and whether management guidance has regularly been met in the past. I suggest you continue to research Jameson Resources to get a better picture of the stock by looking at:
Financial Health: Is JAL’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.
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 31 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.
