Syrah Resources Limited (ASX:SYR): Has Recent Earnings Growth Beaten Long-Term Trend?
Assessing Syrah Resources Limited’s (ASX:SYR) past track record of performance is a useful exercise for investors. It allows us to understand whether the company has met or exceed expectations, which is a great indicator for future performance. Below, I assess SYR’s latest performance announced on 31 December 2017 and evaluate these figures to its historical trend and industry movements. View our latest analysis for Syrah Resources
How SYR fared against its long-term earnings performance and its industry
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 analyze various companies on a more comparable basis, using new information. For Syrah Resources, its latest earnings (trailing twelve month) is -US$12.31M, which compared to the previous year’s level, has become less negative. Given that these figures are somewhat nearsighted, I have estimated an annualized five-year value for SYR’s net income, which stands at -US$6.89M. This shows that, Syrah Resources has historically performed better than recently, though it seems like earnings are now heading back towards a more favorable position once more.
We can further evaluate Syrah Resources’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Syrah Resources’s top-line has increased by 43.77% on average, indicating that the company is in a high-growth phase with expenses shooting ahead of revenues, leading to annual losses. Eyeballing 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 year, and 13.22% over the past five years. This means any tailwind the industry is deriving benefit from, Syrah Resources has not been able to realize the gains unlike its average peer.
What does this mean?
Though Syrah Resources’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always hard to envisage what will happen in the future and when. The most valuable step is to examine company-specific issues Syrah Resources may be facing and whether management guidance has consistently been met in the past. You should continue to research Syrah Resources to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for SYR’s future growth? Take a look at our free research report of analyst consensus for SYR’s outlook.
Financial Health: Is SYR’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.
