Today I will examine Rand Mining Limited’s (ASX:RND) latest earnings update (30 June 2017) and compare these figures against its performance over the past couple of years, in addition to how the rest of RND’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 Rand Mining

Could RND beat the long-term trend and outperform its industry?

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 allows me to assess different stocks on a similar basis, using new information. For Rand Mining, its most recent earnings (trailing twelve month) is AU$16.52M, which compared to the previous year’s figure, has grown by a fairly unexciting 8.07%. Given that these values are fairly myopic, I have calculated an annualized five-year figure for RND’s earnings, which stands at AU$8.09M This shows that, on average, Rand Mining has been able to steadily improve its bottom line over the past couple of years as well.

What’s enabled this growth? Well, let’s take a look at if it is only due to industry tailwinds, or if Rand Mining has seen some company-specific growth. In the last few years, Rand Mining increased its bottom line faster than revenue by effectively controlling its costs. This has led to a margin expansion and profitability over time. Looking at growth from a sector-level, the Australian metals and mining industry has been growing, albeit, at a unexciting single-digit rate of 8.07% in the prior twelve months, and a substantial 13.69% over the last five years. This suggests that whatever uplift the industry is deriving benefit from, Rand Mining has not been able to reap as much as its industry peers.

What does this mean?

While past data is useful, it doesn’t tell the whole story. While Rand Mining has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. You should continue to research Rand Mining to get a more holistic view of the stock by looking at:

• 1. Financial Health: Is RND’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. Valuation: What is RND worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether RND is currently mispriced by the market.

• 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 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.