Examining how TopTung Limited (ASX:TTW) is performing as a company requires looking at more than just a years’ earnings. Below, I will run you through a simple sense check to build perspective on how TopTung is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its metals and mining industry peers. See our latest analysis for TopTung

Commentary On TTW’s Past Performance

I prefer to use data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This technique allows me to analyze different companies on a similar basis, using the most relevant data points. For TopTung, its latest trailing-twelve-month earnings is -A$0.4M, which, against the prior year’s level, has become more negative. Since these figures are relatively short-term thinking, I’ve computed an annualized five-year value for TTW’s net income, which stands at -A$0.2M. This doesn’t look much better, since earnings seem to have steadily been getting more and more negative over time.

Additionally, we can assess TopTung’s loss by looking at what has been happening in the industry as well as within the company. Initially, I want to quickly look into the line items. Revenue growth over the past couple of years has been somewhat soft, remaining flat on average at -0.37%. Since top-line growth is also pretty stale the key to profitability in the future would be managing cost growth rates. Scanning growth from a sector-level, the Australian metals and mining industry has been growing, albeit, at a unexciting single-digit rate of 7.36% in the prior twelve months, and a substantial 11.48% over the past couple of years. This means that whatever uplift the industry is benefiting from, TopTung has not been able to reap as much as its industry peers.

What does this mean?

Though TopTung’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always hard to forecast what will occur going forward, and when. The most insightful step is to assess company-specific issues TopTung may be facing and whether management guidance has dependably been met in the past. I recommend you continue to research TopTung to get a better picture of the stock by looking at:

1. Financial Health: Is TTW’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.