Today I will examine Inca Minerals Limited’s (ASX:ICG) 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 ICG’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. View our latest analysis for Inca Minerals
How Well Did ICG Perform?
For the most up-to-date info, I use data from the most recent 12 months, 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 blend enables me to examine various companies on a more comparable basis, using the latest information. For Inca Minerals, the most recent bottom-line -A$1M, which, relative to the previous year’s level, has become less negative. Since these figures are fairly myopic, I have determined an annualized five-year figure for ICG’s earnings, which stands at -A$5M. This means that, while net income is negative, it has become less negative over the years.
We can further evaluate Inca Minerals’s loss by researching what has been happening in the industry along with within the company. Firstly, I want to briefly look into the line items. Revenue growth over past few years has been negative at -42.48%. The key to profitability here is to make sure the company’s cost growth is well-managed. Eyeballing growth from a sector-level, the Australian metals and mining industry has been growing, albeit, at a subdued single-digit rate of 6.76% in the previous twelve months, and a substantial 11.86% over the previous few years. This means that, though Inca Minerals is presently running a loss, it may have benefited from industry tailwinds, moving earnings in the right direction.
What does this mean?
Though Inca Minerals’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always difficult to forecast what will happen in the future and when. The most valuable step is to examine company-specific issues Inca Minerals may be facing and whether management guidance has dependably been met in the past. You should continue to research Inca Minerals to get a better picture of the stock by looking at:
1. Financial Health: Is ICG’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.