For investors with a long-term horizon, examining earnings trend over time and against industry peers is more insightful than looking at an earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on Ramaco Resources Inc (NASDAQ:METC) useful as an attempt to give more color around how Ramaco Resources is currently performing. Check out our latest analysis for Ramaco Resources
Was METC weak performance lately part of a long-term decline?
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 enables me to analyze different companies on a more comparable basis, using the most relevant data points. For Ramaco Resources, its most recent earnings (trailing twelve month) is -US$15.42M, which compared to last year’s level, has become more negative. Given that these values may be somewhat short-term thinking, I have computed an annualized five-year value for Ramaco Resources’s net income, which stands at -US$7.70M. This doesn’t seem to paint a better picture, since earnings seem to have consistently been getting more and more negative over time.
We can further assess Ramaco Resources’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Ramaco Resources’s top-line more than doubled on average, implying that the business is in a high-growth phase with expenses shooting ahead of revenues, leading to annual losses. Inspecting growth from a sector-level, the US metals and mining industry has been growing its average earnings by double-digit 46.66% in the prior year, and a more subdued 4.19% over the last five years. This means that whatever uplift the industry is profiting from, Ramaco Resources has not been able to leverage it as much as its average peer.
What does this mean?
Ramaco Resources’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. With companies that are currently loss-making, it is always hard to envisage what will occur going forward, and when. The most valuable step is to assess company-specific issues Ramaco Resources may be facing and whether management guidance has steadily been met in the past. I recommend you continue to research Ramaco Resources to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for METC’s future growth? Take a look at our free research report of analyst consensus for METC’s outlook.
- Financial Health: Is METC’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.