After looking at Resource Mining Corporation Limited’s (ASX:RMI) latest earnings announcement (31 December 2017), I found it useful to revisit the company’s performance in the past couple of years and assess this against the most recent figures. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether Resource Mining’s performance has been impacted by industry movements. In this article I briefly touch on my key findings. View our latest analysis for Resource Mining

How RMI 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 allows me to analyze different stocks on a more comparable basis, using the most relevant data points. For Resource Mining, its most recent trailing-twelve-month earnings is -AU$455.23K, which, against last year’s figure, has become less negative. Since these values are relatively myopic, I’ve calculated an annualized five-year value for RMI’s net income, which stands at -AU$1.27M. This means that, while net income is negative, it has become less negative over the years.

We can further assess Resource Mining’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Resource Mining has seen an annual decline in revenue of -22.85%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Looking at growth from a sector-level, the Australian metals and mining industry has been growing its average earnings by double-digit 15.45% in the previous year, and 13.04% over the past half a decade. This means that, even though Resource Mining is currently unprofitable, it may have been aided by industry tailwinds, moving earnings into a more favorable position.

What does this mean?

While past data is useful, it doesn’t tell the whole story. Companies that incur net loss is always difficult to forecast what will happen in the future and when. The most insightful step is to examine company-specific issues Resource Mining may be facing and whether management guidance has dependably been met in the past. I recommend you continue to research Resource Mining to get a more holistic view of the stock by looking at: