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Today I will examine Evolution Mining Limited’s (ASX:EVN) latest earnings update (31 December 2017) and compare these figures against its performance over the past couple of years, in addition to how the rest of EVN’s industry performed. As a long-term investor, I find it useful to analyze the company’s trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time. See our latest analysis for Evolution Mining
Commentary On EVN’s Past Performance
I prefer to use the ‘latest twelve-month’ data, 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 blend enables me to analyze various companies in a uniform manner using new information. For Evolution Mining, its most recent trailing-twelve-month earnings is AU$203.46M, which compared to the prior year’s level, has increased by a substantial 59.21%. Since these figures are fairly nearsighted, I have estimated an annualized five-year value for EVN’s net income, which stands at AU$15.32M This means that, generally, Evolution Mining has been able to steadily raise its profits over the last couple of years as well.
What’s the driver of this growth? Well, let’s take a look at if it is solely owing to an industry uplift, or if Evolution Mining has experienced some company-specific growth. Over the last few years, Evolution Mining expanded its bottom line faster than revenue by effectively controlling its costs. This resulted in a margin expansion and profitability over time. Inspecting growth from a sector-level, the Australian metals and mining industry has been growing its average earnings by double-digit 15.38% in the previous twelve months, and 12.92% over the past five. This suggests that whatever uplift the industry is benefiting from, Evolution Mining is able to leverage this to its advantage.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While Evolution Mining has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I recommend you continue to research Evolution Mining to get a more holistic view of the stock by looking at:
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1. Future Outlook: What are well-informed industry analysts predicting for EVN’s future growth? Take a look at our free research report of analyst consensus for EVN’s outlook.
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2. Financial Health: Is EVN’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.
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3. 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.