When New Talisman Gold Mines Limited (NZSE:NTL) released its most recent earnings update (30 September 2017), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Understanding how New Talisman Gold Mines performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see NTL has performed. See our latest analysis for New Talisman Gold Mines
Were NTL’s earnings stronger than its past performances and the industry?
I prefer to use the ‘latest twelve-month’ data, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This method allows me to assess different stocks on a more comparable basis, using the most relevant data points. New Talisman Gold Mines’s most recent earnings -NZ$0.9M, which, against the previous year’s level, has become less negative. Since these values are relatively myopic, I’ve estimated an annualized five-year figure for NTL’s net income, which stands at -NZ$1.2M. This shows that, although net income is negative, it has become less negative over the years.
We can further examine New Talisman Gold Mines’s loss by looking at what’s going on in the industry as well as within the company. Firstly, I want to quickly look into the line items. Revenue growth over the past couple of years has been somewhat unexciting, remaining flat on average at -0.38%. Given that top-line growth is also pretty flat, the key to profitability going forward would be managing costs. Viewing growth from a sector-level, the NZ metals and mining industry has been growing its average earnings by double-digit 31.01% in the prior twelve months, and a more muted 3.51% over the previous few years. This suggests that, even though New Talisman Gold Mines is presently running a loss, it may have gained from industry tailwinds, moving earnings in the right direction.
What does this mean?
New Talisman Gold Mines’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. With companies that are currently loss-making, it is always difficult to forecast what will happen in the future and when. The most useful step is to examine company-specific issues New Talisman Gold Mines may be facing and whether management guidance has regularly been met in the past. I suggest you continue to research New Talisman Gold Mines to get a more holistic view of the stock by looking at:
1. Financial Health: Is NTL’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.