Examining Chesser Resources Limited’s (ASX:CHZ) past track record of performance is a valuable exercise for investors. It enables us to understand whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess CHZ’s latest performance announced on 31 December 2017 and weigh these figures against its longer term trend and industry movements. See our latest analysis for Chesser Resources
Was CHZ’s weak performance lately a 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 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 method enables me to examine various companies on a similar basis, using new information. For Chesser Resources, its most recent earnings (trailing twelve month) is -AU$982.68K, which, against last year’s level, has become more negative. Since these values may be somewhat myopic, I have calculated an annualized five-year value for CHZ’s net income, which stands at -AU$1.89M. This means even though net income is negative, it has become less negative over the years.
We can further analyze Chesser Resources’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Chesser Resources has seen an annual decline in revenue of -17.41%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Inspecting growth from a sector-level, the Australian metals and mining industry has been growing its average earnings by double-digit 18.18% over the previous year, and a more muted 8.68% over the previous five years. This suggests that whatever tailwind the industry is enjoying, Chesser Resources has not been able to gain as much as its average peer.
What does this mean?
Chesser 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 difficult to predict what will occur going forward, and when. The most useful step is to assess company-specific issues Chesser Resources may be facing and whether management guidance has steadily been met in the past. You should continue to research Chesser Resources to get a more holistic view of the stock by looking at: