Does Prospect Resources Limited’s (ASX:PSC) Latest Financial Perfomance Look Strong?
Today I will examine Prospect Resources Limited’s (ASX:PSC) latest earnings update (31 December 2017) and compare these figures against its performance over the past couple of years, in addition to how the rest of PSC’s industry performed. As a long-term investor, I find it useful to analyze the company’s trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time. Check out our latest analysis for Prospect Resources
How Did PSC’s Recent Performance Stack Up Against Its Past?
For the most up-to-date info, I use the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This allows me to assess various companies on a more comparable basis, using new information. For Prospect Resources, its most recent earnings (trailing twelve month) is -AU$5.50M, which, relative to last year’s figure, has become less negative. Given that these values are relatively nearsighted, I’ve computed an annualized five-year value for PSC’s earnings, which stands at -AU$3.09M. This means that, Prospect 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 Prospect Resources’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Prospect Resources’s top-line has increased by 55.10% on average, signalling that the company is in a high-growth phase with expenses racing ahead 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 15.45% over the past year, and 13.22% over the previous five years. This shows that, despite the fact that Prospect Resources is presently running a loss, it may have gained from industry tailwinds, moving earnings towards to right direction.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that incur net loss is always difficult to predict what will happen in the future and when. The most valuable step is to assess company-specific issues Prospect Resources may be facing and whether management guidance has dependably been met in the past. I suggest you continue to research Prospect Resources to get a better picture of the stock by looking at:
Financial Health: Is PSC’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.
