In This Article:
Examining how Cokal Limited (ASX:CKA) is performing as a company requires looking at more than just a years’ earnings. Below, I will run you through a simple sense check to build perspective on how Cokal is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its metals and mining industry peers. Check out our latest analysis for Cokal
Were CKA’s earnings stronger than its past performances and the industry?
I use the ‘latest twelve-month’ data, 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 method allows me to examine different companies on a more comparable basis, using the most relevant data points. For Cokal, its most recent earnings (trailing twelve month) is -US$6.15M, which, relative to the prior year’s level, has become less negative. Since these values are fairly short-term, I have determined an annualized five-year figure for Cokal’s earnings, which stands at -US$11.52M. This means that, though net income is negative, it has become less negative over the years.
We can further examine Cokal’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Cokal has seen an annual decline in revenue of -30.06%, 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 18.18% in the prior year, and a more subdued 8.68% over the last five years. This means although Cokal is currently unprofitable, it may have been aided by industry tailwinds, moving earnings towards to right direction.
What does this mean?
Though Cokal’s past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always hard to envisage what will happen in the future and when. The most useful step is to examine company-specific issues Cokal may be facing and whether management guidance has dependably been met in the past. I suggest you continue to research Cokal to get a better picture of the stock by looking at:
-
Future Outlook: What are well-informed industry analysts predicting for CKA’s future growth? Take a look at our free research report of analyst consensus for CKA’s outlook.
-
Financial Health: Is CKA’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.
-
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 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.