Advertisement
U.S. markets closed
  • S&P 500

    5,254.35
    +5.86 (+0.11%)
     
  • Dow 30

    39,807.37
    +47.29 (+0.12%)
     
  • Nasdaq

    16,379.46
    -20.06 (-0.12%)
     
  • Russell 2000

    2,124.55
    +10.20 (+0.48%)
     
  • Crude Oil

    83.11
    -0.06 (-0.07%)
     
  • Gold

    2,254.80
    +16.40 (+0.73%)
     
  • Silver

    25.10
    +0.18 (+0.74%)
     
  • EUR/USD

    1.0774
    -0.0020 (-0.18%)
     
  • 10-Yr Bond

    4.2060
    +0.0100 (+0.24%)
     
  • dólar/libra

    1.2623
    +0.0001 (+0.01%)
     
  • USD/JPY

    151.3390
    -0.0330 (-0.02%)
     
  • Bitcoin USD

    69,820.77
    -524.45 (-0.75%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • FTSE 100

    7,952.62
    +20.64 (+0.26%)
     
  • Nikkei 225

    40,369.44
    +201.37 (+0.50%)
     

Was GBM Gold Limited’s (ASX:GBM) Earnings Growth Better Than The Industry’s?

Today I will examine GBM Gold Limited’s (ASX:GBM) 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 GBM’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 GBM Gold

Could GBM beat the long-term trend and outperform its industry?

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 technique allows me to assess different companies in a uniform manner using the most relevant data points. For GBM Gold, its latest earnings (trailing twelve month) is -AU$1.18M, which, in comparison to the prior year’s level, has become less negative. Since these figures are fairly short-term, I have determined an annualized five-year value for GBM Gold’s earnings, which stands at -AU$1.33M. This suggests that, even though net income is negative, it has become less negative over the years.

ASX:GBM Income Statement Mar 22nd 18
ASX:GBM Income Statement Mar 22nd 18

We can further examine GBM Gold’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years GBM Gold has seen an annual decline in revenue of -32.62%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Scanning growth from a sector-level, the Australian metals and mining industry has been growing its average earnings by double-digit 15.38% over the previous year, and 12.92% over the past five years. This means that, even though GBM Gold is currently loss-making, it may have benefited from industry tailwinds, moving earnings towards to right direction.

What does this mean?

GBM Gold’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that incur net loss is always difficult to predict what will occur going forward, and when. The most valuable step is to examine company-specific issues GBM Gold may be facing and whether management guidance has regularly been met in the past. I suggest you continue to research GBM Gold to get a better picture of the stock by looking at:

  • 1. Financial Health: Is GBM’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. Valuation: What is GBM 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 GBM is currently mispriced by the market.

  • 3. 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.

Advertisement