Did Malachite Resources Limited’s (ASX:MAR) Recent Earnings Growth Beat The Trend?
When Malachite Resources Limited’s (ASX:MAR) announced its latest earnings (30 June 2017), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were Malachite Resources’s average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not MAR actually performed well. Below is a quick commentary on how I see MAR has performed. See our latest analysis for MAR
How Well Did MAR Perform?
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 blend allows me to examine many different companies in a uniform manner using new information. Malachite Resources’s latest twelve-month earnings -A$1M, which, relative to the previous year’s level, has become less negative. Since these values may be relatively short-term, I’ve determined an annualized five-year value for MAR’s earnings, which stands at -A$6M. This means that, despite the fact that net income is negative, it has become less negative over the years.
We can further examine Malachite Resources’s loss by looking at what’s going on in the industry on top of within the company. First, I want to quickly look into the line items. Revenue growth over past few years has been negative at -26.94%. The key to profitability here is to make sure the company’s cost growth is well-controlled. Looking at 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 past year, and a substantial 11.86% over the previous few years. This means that, despite the fact that Malachite Resources is presently running a loss, it may have benefited from industry tailwinds, moving earnings in the right direction.
What does this mean?
Malachite Resources’s track record can be a valuable insight into its earnings performance, but it certainly 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 examine company-specific issues Malachite Resources may be facing and whether management guidance has steadily been met in the past. I suggest you continue to research Malachite Resources to get a better picture of the stock by looking at:
1. Financial Health: Is MAR’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.
