In this article, I will take a look at Yamana Gold Inc’s (NYSE:AUY) 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 AUY’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 Yamana Gold
Did AUY beat its long-term earnings growth trend and its industry?
I use the ‘latest twelve-month’ data, 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 allows me to assess many different companies on a similar basis, using the most relevant data points. For Yamana Gold, its latest earnings (trailing twelve month) is -US$194.40M, which, relative to last year’s level, has become less negative. Since these figures may be somewhat nearsighted, I have computed an annualized five-year figure for AUY’s net income, which stands at -US$333.52M. This suggests that, while net income is negative, it has become less negative over the years.
We can further examine Yamana Gold’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Yamana Gold has seen an annual decline in revenue of -3.79%, 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 US metals and mining industry has been multiplying average earnings growth of 54.32% over the previous year, and a flatter -0.35% over the past five years. This means any uplift the industry is benefiting from, Yamana Gold has not been able to realize the gains unlike its average peer.
What does this mean?
Though Yamana Gold’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always hard to predict what will occur going forward, and when. The most insightful step is to examine company-specific issues Yamana Gold may be facing and whether management guidance has steadily been met in the past. I recommend you continue to research Yamana Gold to get a better picture of the stock by looking at:
- 1. Future Outlook: What are well-informed industry analysts predicting for AUY’s future growth? Take a look at our free research report of analyst consensus for AUY’s outlook.
- 2. Financial Health: Is AUY’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.