Pegasus Metals Limited’s (ASX:PUN) Earnings Dropped -18.15%, How Did It Fare Against The Industry?
In this article, I will take a look at Pegasus Metals Limited’s (ASX:PUN) most recent earnings update (31 December 2017) and compare these latest figures against its performance over the past few years, along with how the rest of PUN’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 Pegasus Metals
Was PUN’s recent earnings decline indicative of a tough track record?
I look at data from the most recent 12 months, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This technique enables me to examine different stocks on a similar basis, using the most relevant data points. For Pegasus Metals, its latest earnings (trailing twelve month) is -AU$422.14K, which, relative to the previous year’s level, has become more negative. Since these values may be somewhat nearsighted, I have calculated an annualized five-year figure for PUN’s net income, which stands at -AU$2.31M. This means though net income is negative, it has become less negative over the years.
We can further assess Pegasus Metals’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Pegasus Metals has seen an annual decline in revenue of -36.39%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Inspecting growth from a sector-level, the Australian metals and mining industry has been growing its average earnings by double-digit 20.13% over the prior twelve months, and 13.22% over the past five. This suggests that any tailwind the industry is profiting from, Pegasus Metals has not been able to reap as much as its average peer.
What does this mean?
Though Pegasus Metals’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always hard to forecast what will occur going forward, and when. The most useful step is to assess company-specific issues Pegasus Metals may be facing and whether management guidance has steadily been met in the past. I recommend you continue to research Pegasus Metals to get a better picture of the stock by looking at:
Financial Health: Is PUN’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.
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.
