Does Greencastle Resources Ltd’s (CVE:VGN) Latest Financial Perfomance Look Strong?
Assessing Greencastle Resources Ltd’s (TSXV:VGN) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess VGN’s recent performance announced on 30 September 2017 and evaluate these figures to its long-term trend and industry movements. View our latest analysis for Greencastle Resources
How VGN fared against its long-term earnings performance and its industry
I 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 analyze different companies on a more comparable basis, using new information. For Greencastle Resources, its most recent trailing-twelve-month earnings is -CA$724.52K, which, relative to the prior year’s level, has become less negative. Given that these values may be relatively short-term thinking, I have determined an annualized five-year figure for VGN’s net income, which stands at -CA$566.20K. This shows that, Greencastle Resources has historically performed better than recently, even though it seems like earnings are now heading back towards to right direction again.
We can further analyze Greencastle Resources’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Greencastle Resources has seen an annual decline in revenue of -29.97%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Viewing growth from a sector-level, the Canadian oil and gas industry has been enduring some headwinds in the prior twelve months, leading to average earnings dropping by more than half. This is a a notable change, given that the industry has been delivering a relatively flat growth rate over the past few years. This means despite the fact that Greencastle Resources is currently running a loss, whatever near-term headwind the industry is enduring, Greencastle Resources is less exposed compared to its peers.
What does this mean?
Greencastle 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 difficult to envisage what will happen in the future and when. The most valuable step is to examine company-specific issues Greencastle Resources may be facing and whether management guidance has steadily been met in the past. I recommend you continue to research Greencastle Resources to get a better picture of the stock by looking at:
1. Financial Health: Is VGN’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 30 September 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.
