Understanding how Galvo SA. (WSE:GAL) is performing as a company requires looking at more than just a years’ earnings. Today I will run you through a basic sense check to gain perspective on how Galvo is doing by comparing its latest earnings with its long-term trend as well as the performance of its metals and mining industry peers. Check out our latest analysis for Galvo
How GAL fared against its long-term earnings performance and its industry
For the purpose of this commentary, I like to use data from the most recent 12 months, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This method enables me to assess various companies on a similar basis, using new information. For Galvo, its most recent earnings (trailing twelve month) is -ZŁ370.05K, which, relative to the previous year’s level, has become less negative. Since these figures may be fairly short-term, I have determined an annualized five-year figure for Galvo’s net income, which stands at -ZŁ382.20K. This means despite the fact that net income is negative, it has become less negative over the years.
We can further examine Galvo’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Galvo’s top-line has grown by a mere 5.62%, on average. The company’s inability to breakeven has been aided by the relatively flat top-line in the past. Scanning growth from a sector-level, the PL metals and mining industry has been enduring some headwinds in the past year, leading to an average earnings drop of -11.68%. This is a major change, given that the industry has constantly been delivering a a solid growth of 11.38% in the last five years. This means that while Galvo is currently unprofitable, whatever recent headwind the industry is enduring, Galvo is relatively better-cushioned than its peers.
What does this mean?
Though Galvo’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 useful step is to examine company-specific issues Galvo may be facing and whether management guidance has consistently been met in the past. You should continue to research Galvo to get a better picture of the stock by looking at:
- Financial Health: Is GAL’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.
- Valuation: What is GAL worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether GAL is currently mispriced by the market.
- 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.