Does Nagambie Resources Limited’s (ASX:NAG) Past Performance Indicate A Weaker Future?
After reading Nagambie Resources Limited’s (ASX:NAG) latest earnings update (30 December 2017), I found it beneficial to look back at how the company has performed in the past and compare this against the most recent numbers. As a long-term investor I tend to pay attention to earnings trend, rather than a single number at one point in time. I also like to compare against an industry benchmark to understand whether NAG has outperformed, or whether it is simply riding an industry wave. Below is a brief commentary on my key takeaways. See our latest analysis for Nagambie Resources
Did NAG perform worse than its track record and industry?
I like to use data from the most recent 12 months, 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 enables me to analyze various companies on a more comparable basis, using new information. For Nagambie Resources, its most recent bottom-line (trailing twelve month) is -AU$1.61M, which compared to the prior year’s level, has become more negative. Given that these values are fairly nearsighted, I’ve determined an annualized five-year figure for NAG’s earnings, which stands at -AU$860.32K. This doesn’t look much better, since earnings seem to have gradually been getting more and more negative over time.
We can further assess Nagambie Resources’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Nagambie Resources’s top-line has risen by 21.05% on average, implying that the company is in a high-growth period with expenses shooting ahead of revenues, leading to annual losses. Eyeballing 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 subdued 8.68% over the previous five years. This means that any tailwind the industry is deriving benefit from, Nagambie Resources has not been able to reap as much as its industry peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. With companies that are currently loss-making, it is always difficult to predict what will occur going forward, and when. The most insightful step is to examine company-specific issues Nagambie Resources may be facing and whether management guidance has steadily been met in the past. You should continue to research Nagambie Resources to get a more holistic view of the stock by looking at:
Financial Health: Is NAG’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 30 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.
