Polymetal International Plc (LON:POLY): Does The Earnings Decline Make It An Underperformer?
Assessing Polymetal International Plc’s (LSE:POLY) performance as a company requires looking at more than just a years’ earnings data. Below, I will run you through a simple sense check to build perspective on how Polymetal International is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its metals and mining industry peers. View our latest analysis for Polymetal International
Was POLY’s weak performance lately a part of a long-term decline?
I like to use 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 blend enables me to assess various companies on a more comparable basis, using the most relevant data points. For Polymetal International, its most recent bottom-line (trailing twelve month) is US$354.00M, which compared to the prior year’s level, has declined by -10.38%. Given that these figures may be somewhat short-term, I have computed an annualized five-year value for Polymetal International’s earnings, which stands at US$174.01M This shows that although earnings declined from the previous year, over a longer period of time, Polymetal International’s earnings have been growing on average.
What’s enabled this growth? Well, let’s take a look at whether it is solely due to industry tailwinds, or if Polymetal International has experienced some company-specific growth. The ascend in earnings seems to be supported by a substantial top-line increase outpacing its growth rate of costs. Though this resulted in a margin contraction, it has made Polymetal International more profitable. Scanning growth from a sector-level, the UK metals and mining industry has been growing its average earnings by double-digit 49.95% in the past year, . This is a turnaround from a volatile drop of -6.96% in the last few years. This suggests that, in the recent industry expansion, Polymetal International has not been able to leverage it as much as its industry peers.
What does this mean?
Though Polymetal International’s past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have unpredictable earnings, can have many factors influencing its business. I recommend you continue to research Polymetal International to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for POLY’s future growth? Take a look at our free research report of analyst consensus for POLY’s outlook.
2. Financial Health: Is POLY’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.
