Does Newmac Resources Inc’s (CVE:NER) Past Performance Indicate A Stronger Future?
Assessing Newmac Resources Inc’s (TSXV:NER) performance as a company requires looking at more than just a years’ earnings data. Below, I will run you through a simple sense check to build perspective on how Newmac Resources is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its metals and mining industry peers. See our latest analysis for Newmac Resources
How NER fared against its long-term earnings performance and its industry
For the most up-to-date info, 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 technique enables me to analyze various companies in a uniform manner using the latest information. For Newmac Resources, its most recent earnings (trailing twelve month) is -CA$338.61K, which compared to last year’s level, has become less negative. Since these values are fairly short-term thinking, I have computed an annualized five-year figure for NER’s earnings, which stands at -CA$438.78K. This means that, although net income is negative, it has become less negative over the years.
We can further evaluate Newmac Resources’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Newmac Resources has seen an annual decline in revenue of -76.32%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Looking at growth from a sector-level, the Canadian metals and mining industry has been growing its average earnings by double-digit 29.61% over the previous year, and 12.81% over the past five. This shows that, while Newmac Resources is presently loss-making, it may have been aided by industry tailwinds, moving earnings into a more favorable position.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that incur net loss is always hard to forecast what will happen in the future and when. The most valuable step is to assess company-specific issues Newmac Resources may be facing and whether management guidance has steadily been met in the past. I suggest you continue to research Newmac Resources to get a better picture of the stock by looking at:
Financial Health: Is NER’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 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.
