Nordic Mining ASA (OB:NOM): Does The Earnings Decline Make It An Underperformer?
Today I will examine Nordic Mining ASA’s (OB:NOM) 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 NOM’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. View our latest analysis for Nordic Mining
Did NOM perform worse than its track record and industry?
To account for any quarterly or half-yearly updates, 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 on a more comparable basis, using the latest information. For Nordic Mining, its most recent bottom-line (trailing twelve month) is -ØRE35.53M, which compared to the prior year’s level, has become more negative. Since these values may be fairly myopic, I’ve created an annualized five-year value for NOM’s net income, which stands at -ØRE24.81M. This doesn’t look much better, since earnings seem to have gradually been getting more and more negative over time.
We can further analyze Nordic Mining’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Nordic Mining has seen an annual decline in revenue of -79.24%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Viewing growth from a sector-level, the NO metals and mining industry has been growing its average earnings by double-digit 47.60% in the past twelve months, and a less exciting 2.48% over the last five years. This means whatever uplift the industry is deriving benefit from, Nordic Mining has not been able to gain as much as its industry peers.
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 forecast what will occur going forward, and when. The most insightful step is to assess company-specific issues Nordic Mining may be facing and whether management guidance has steadily been met in the past. You should continue to research Nordic Mining to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for NOM’s future growth? Take a look at our free research report of analyst consensus for NOM’s outlook.
2. Financial Health: Is NOM’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 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.
