Does Thundelarra Limited’s (ASX:THX) Earnings Growth Make It An Outperformer?
Assessing Thundelarra Limited’s (ASX:THX) 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 THX’s recent performance announced on 30 September 2017 and evaluate these figures to its long-term trend and industry movements. Check out our latest analysis for Thundelarra
Were THX’s earnings stronger than its past performances and the industry?
I like to 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 method enables me to assess many different companies on a more comparable basis, using new information. For Thundelarra, its most recent trailing-twelve-month earnings is -AU$2.57M, which compared to last year’s figure, has become less negative. Since these figures may be relatively myopic, I’ve calculated an annualized five-year value for THX’s earnings, which stands at -AU$6.84M. This shows that, even though net income is negative, it has become less negative over the years.
We can further evaluate Thundelarra’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Thundelarra has seen an annual decline in revenue of -17.53%, 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 Australian metals and mining industry has been growing its average earnings by double-digit 15.38% over the prior year, and 13.04% over the last five years. This means despite the fact that Thundelarra is currently loss-making, it may have been aided by industry tailwinds, moving earnings into a more favorable position.
What does this mean?
Though Thundelarra’s past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always difficult to predict what will happen in the future and when. The most useful step is to assess company-specific issues Thundelarra may be facing and whether management guidance has steadily been met in the past. You should continue to research Thundelarra to get a better picture of the stock by looking at:
1. Financial Health: Is THX’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.
