Measuring Alliance Resources Limited’s (ASX:AGS) track record of past performance is a useful exercise for investors. It enables 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 AGS’s recent performance announced on 30 June 2017 and weigh these figures against its long-term trend and industry movements. See our latest analysis for Alliance Resources

How Did AGS’s Recent Performance Stack Up Against Its Past?

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 enables me to assess various companies on a more comparable basis, using the latest information. For Alliance Resources, its most recent earnings (trailing twelve month) is -AU$1.15M, which, against the prior year’s figure, has turned from positive to negative. Given that these values are relatively myopic, I’ve calculated an annualized five-year value for AGS’s earnings, which stands at AU$2.17M.

We can further examine Alliance Resources’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Alliance Resources has seen an annual decline in revenue of -29.55%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Scanning growth from a sector-level, the Australian metals and mining industry has been growing its average earnings by double-digit 15.35% in the past year, and 13.19% over the last five years. This shows that any tailwind the industry is benefiting from, Alliance Resources has not been able to leverage it as much as its industry peers.

What does this mean?

Though Alliance Resources’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 occur going forward, and when. The most useful step is to examine company-specific issues Alliance Resources may be facing and whether management guidance has dependably been met in the past. I recommend you continue to research Alliance Resources to get a better picture of the stock by looking at:

• 1. Financial Health: Is AGS’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 30 June 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.