Minbos Resources Limited (ASX:MNB): Does 11.8% EPS Drop In A Year Reflect The Long-Term Trend?
After looking at Minbos Resources Limited’s (ASX:MNB) latest earnings update (30 June 2017), I found it helpful to revisit the company’s performance in the past couple of years and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is an important aspect. In this article I briefly touch on my key findings. View our latest analysis for Minbos Resources
How Did MNB’s Recent Performance Stack Up Against Its Past?
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 enables me to assess various companies on a more comparable basis, using the most relevant data points. For Minbos Resources, the most recent bottom-line -A$2M, which, in comparison to the previous year’s figure, has become more negative. Since these values may be fairly nearsighted, I have determined an annualized five-year value for MNB’s earnings, which stands at -A$4M. This means despite the fact that net income is negative, it has become less negative over the years.
We can further analyze Minbos Resources’s loss by researching what’s going on in the industry on top of within the company. Firstly, I want to quickly look into the line items. Revenue growth over last few years has been negative at -45.97%. The key to profitability here is to make sure the company’s cost growth is well-controlled. Eyeballing growth from a sector-level, the Australian metals and mining industry has been growing, albeit, at a muted single-digit rate of 6.76% over the previous twelve months, and a substantial 11.86% over the past five. This means that whatever uplift the industry is benefiting from, Minbos Resources has not been able to realize the gains unlike its average peer.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that incur net loss is always hard to envisage what will occur going forward, and when. The most valuable step is to examine company-specific issues Minbos Resources may be facing and whether management guidance has steadily been met in the past. You should continue to research Minbos Resources to get a more holistic view of the stock by looking at:
1. Financial Health: Is MNB’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 last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. 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.
