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Measuring China Natural Resources Inc’s (NASDAQ:CHNR) track record of past performance is a valuable exercise for investors. It allows us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess CHNR’s recent performance announced on 30 June 2017 and compare these figures to its historical trend and industry movements. See our latest analysis for China Natural Resources
How CHNR fared against its long-term earnings performance and its industry
For the purpose of this commentary, I like to 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 allows me to examine many different companies on a more comparable basis, using new information. For China Natural Resources, its most recent trailing-twelve-month earnings is -CN¥24.33M, which, in comparison to last year’s figure, has become less negative. Given that these figures are relatively short-term, I’ve calculated an annualized five-year value for CHNR’s earnings, which stands at -CN¥17.66M. This suggests that, China Natural Resources has historically performed better than recently, although it seems like earnings are now heading back towards to right direction again.
We can further analyze China Natural Resources’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years China Natural Resources has seen an annual decline in revenue of -43.06%, 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 US metals and mining industry has been increasing average earnings growth of 52.62% in the prior year, and a flatter 0.048% over the last five years. This means that whatever uplift the industry is benefiting from, China Natural Resources has not been able to reap as much as its average peer.
What does this mean?
Though China Natural Resources’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always difficult to envisage what will happen in the future and when. The most valuable step is to assess company-specific issues China Natural Resources may be facing and whether management guidance has consistently been met in the past. You should continue to research China Natural Resources to get a better picture of the stock by looking at:
1. Financial Health: Is CHNR’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 June 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.