When Mantle Mining Corporation Limited (ASX:MNM) released its most recent earnings update (30 June 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 Mantle Mining 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 MNM has performed. View our latest analysis for Mantle Mining

Was MNM’s weak performance lately a part of a long-term decline?

I like 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 method allows me to assess different stocks on a similar basis, using the most relevant data points. For Mantle Mining, the latest twelve-month earnings -A$7.6M, which compared to the prior year’s level, has become more negative. Since these values may be relatively nearsighted, I have determined an annualized five-year value for Mantle Mining’s net income, which stands at -A$3.4M. This doesn’t look much better, since earnings seem to have gradually been getting more and more negative over time.

Additionally, we can assess Mantle Mining’s loss by researching what has been happening in the industry along with within the company. Firstly, I want to quickly look into the line items. Revenue growth over the last couple of years has grown by 31.62%, signalling that Mantle Mining is in a high-growth period with expenses shooting ahead of elevated top-line growth rates. Inspecting growth from a sector-level, the Australian metals and mining industry has been growing, albeit, at a muted single-digit rate of 7.36% over the past twelve months, and 8.50% over the previous five years. This means that whatever tailwind the industry is deriving benefit from, Mantle Mining has not been able to reap as much as its industry peers.

What does this mean?

Mantle Mining’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 forecast what will occur going forward, and when. The most valuable step is to assess company-specific issues Mantle Mining may be facing and whether management guidance has dependably been met in the past. You should continue to research Mantle Mining to get a more holistic view of the stock by looking at: