When Vector Resources Limited (ASX:VEC) announced its most recent earnings (31 December 2017), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well Vector Resources has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I’ve summarized the key takeaways on how I see VEC has performed. Check out our latest analysis for Vector Resources
How Well Did VEC Perform?
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 technique allows me to examine many different companies in a uniform manner using the latest information. For Vector Resources, its most recent bottom-line (trailing twelve month) is -AU$750.52K, which, relative to the previous year’s figure, has become more negative. Since these values may be somewhat short-term thinking, I have calculated an annualized five-year value for VEC’s earnings, which stands at -AU$2.88M. This suggests that, despite the fact that net income is negative, it has become less negative over the years.
We can further assess Vector Resources’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Vector Resources has seen an annual decline in revenue of -81.90%, 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 15.31% over the past year, and 13.13% over the past five years. This means that any tailwind the industry is enjoying, Vector Resources has not been able to leverage it as much as its industry peers.
What does this mean?
Vector Resources’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. With companies that are currently loss-making, it is always difficult to envisage what will occur going forward, and when. The most useful step is to assess company-specific issues Vector Resources may be facing and whether management guidance has steadily been met in the past. You should continue to research Vector Resources to get a more holistic view of the stock by looking at: