Measuring Focus Minerals Limited’s (ASX:FML) track record of past performance is a valuable exercise for investors. It allows us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess FML’s recent performance announced on 31 December 2017 and compare these figures to its historical trend and industry movements. View our latest analysis for Focus Minerals

How Well Did FML Perform?

I look at 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 technique allows me to analyze many different companies on a more comparable basis, using new information. For Focus Minerals, its latest trailing-twelve-month earnings is -AU$4.81M, which, relative to the prior year’s level, has become more negative. Given that these figures may be relatively short-term, I have computed an annualized five-year figure for Focus Minerals’s earnings, which stands at -AU$26.98M. This shows that, despite the fact that net income is negative, it has become less negative over the years.

We can further examine Focus Minerals’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Focus Minerals has seen an annual decline in revenue of -46.91%, 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 Australian metals and mining industry has been growing its average earnings by double-digit 18.18% over the prior year, and a more subdued 8.68% over the past half a decade. This means whatever tailwind the industry is deriving benefit from, Focus Minerals has not been able to realize the gains unlike its average peer.

What does this mean?

Though Focus Minerals’s past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always difficult to predict what will happen in the future and when. The most useful step is to examine company-specific issues Focus Minerals may be facing and whether management guidance has dependably been met in the past. You should continue to research Focus Minerals to get a more holistic view of the stock by looking at:

1. Financial Health: Is FML’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.

2. 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.