Metal Bank Limited (ASX:MBK): Has Recent Earnings Growth Beaten Long-Term Trend?
Increase in profitability and industry-beating performance can be essential considerations in a stock for some investors. In this article, I will take a look at Metal Bank Limited’s (ASX:MBK) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers. Check out our latest analysis for Metal Bank
Did MBK beat its long-term earnings growth trend and its industry?
I look at 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 allows me to assess different stocks on a similar basis, using the latest information. For Metal Bank, its latest trailing-twelve-month earnings is -AU$759.34K, which, against last year’s level, has become less negative. Since these figures are somewhat nearsighted, I’ve computed an annualized five-year figure for MBK’s net income, which stands at -AU$1.41M. This means that, though net income is negative, it has become less negative over the years.
We can further analyze Metal Bank’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Metal Bank’s revenue growth has been relatively unexciting, with an annual growth rate of -1.70%, on average. The company’s inability to breakeven has been aided by the relatively flat top-line in the past. Viewing growth from a sector-level, the Australian metals and mining industry has been growing its average earnings by double-digit 15.38% in the past twelve months, and 13.04% over the previous five years. This means that, despite the fact that Metal Bank is currently unprofitable, it may have been aided by industry tailwinds, moving earnings in the right direction.
What does this mean?
While past data is useful, it doesn’t tell the whole story. With companies that are currently loss-making, it is always difficult to envisage what will occur going forward, and when. The most useful step is to examine company-specific issues Metal Bank may be facing and whether management guidance has steadily been met in the past. I recommend you continue to research Metal Bank to get a better picture of the stock by looking at:
1. Financial Health: Is MBK’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 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.
