Did Kula Gold Limited’s (ASX:KGD) Recent Earnings Growth Beat The Trend?
Examining Kula Gold Limited’s (ASX:KGD) past track record of performance is a useful exercise for investors. It allows us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess KGD’s latest performance announced on 31 December 2017 and weight these figures against its longer term trend and industry movements. View our latest analysis for Kula Gold
Did KGD beat its long-term earnings growth trend and its industry?
I look at data from the most recent 12 months, 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 assess different companies on a more comparable basis, using new information. For Kula Gold, its latest earnings (trailing twelve month) is -AU$759.00K, which compared to the prior year’s figure, has become less negative. Given that these values may be fairly short-term thinking, I have calculated an annualized five-year figure for KGD’s earnings, which stands at -AU$18.56M. This shows that, even though net income is negative, it has become less negative over the years.
We can further analyze Kula Gold’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Kula Gold has seen an annual decline in revenue of -33.33%, 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 15.38% over the previous year, and 13.19% over the past five years. This means although Kula Gold is presently running a loss, it may have gained from industry tailwinds, moving earnings towards to right direction.
What does this mean?
Though Kula Gold’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always difficult to forecast what will happen in the future and when. The most insightful step is to examine company-specific issues Kula Gold may be facing and whether management guidance has dependably been met in the past. I suggest you continue to research Kula Gold to get a better picture of the stock by looking at:
1. Financial Health: Is KGD’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 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.
