Assessing Randgold Resources Limited’s (LSE:RRS) 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 RRS’s recent performance announced on 30 September 2017 and evaluate these figures to its long-term trend and industry movements. View our latest analysis for Randgold Resources
How RRS fared against its long-term earnings performance and its industry
I 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 blend allows me to assess different stocks in a uniform manner using new information. For Randgold Resources, its latest trailing-twelve-month earnings is $281.1M, which compared to the previous year’s level, has jumped up by 31.66%. Since these figures are somewhat short-term thinking, I’ve estimated an annualized five-year value for RRS’s earnings, which stands at $283.3M. This shows that, despite the fact that earnings increased from last year’s level, over a longer period of time, Randgold Resources’s earnings have been waning on average.
Why could this be happening? Well, let’s take a look at what’s occurring with margins and if the entire industry is experiencing the hit as well. Revenue growth over the last few years, has been positive, however earnings growth has been falling. This implies that Randgold Resources has been ramping up expenses, which is hurting margins and earnings, and is not a sustainable practice. Eyeballing growth from a sector-level, the UK metals and mining industry has been growing its average earnings by double-digit 36.65% over the previous twelve months, . This is a turnaround from a volatile drop of -7.59% in the previous couple of years. This means in the recent industry expansion, Randgold Resources has not been able to reap as much as its average peer.
What does this mean?
Though Randgold Resources’s past data is helpful, it is only one aspect of my investment thesis. Recent positive growth doesn’t necessarily mean it’s onwards and upwards for the company. There could be variables that are influencing the entire industry hence the high industry growth rate over the same time period. You should continue to research Randgold Resources to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for RRS’s future growth? Take a look at our free research report of analyst consensus for RRS’s outlook.
2. Financial Health: Is RRS’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.
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 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.