Examining Oklo Resources Limited’s (ASX:OKU) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess OKU’s latest performance announced on 30 June 2017 and compare these figures to its longer term trend and industry movements. See our latest analysis for OKU
Was OKU’s recent earnings decline indicative of a tough track record?
I prefer to 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 blend enables me to examine different stocks on a more comparable basis, using the latest information. Oklo Resources’s most recent bottom-line -A$2M, which compared to the prior year’s level, has become more negative. Given that these values may be relatively nearsighted, I’ve computed an annualized five-year figure for Oklo Resources’s earnings, which stands at -A$1M. This doesn’t look much better, since earnings seem to have steadily been getting more and more negative over time.
We can further analyze Oklo Resources’s loss by looking at what’s going on in the industry on top of within the company. First, I want to briefly look into the line items. Revenue growth over past couple of years has been negative, with the actual revenue level reducing by more than half! The key to profitability here is to make sure the company’s cost growth is well-managed. Inspecting growth from a sector-level, the Australian oil, gas and consumable fuels industry has been increasing average earnings growth of 57.50% over the past twelve months, and a less exciting 3.66% over the past five years. This suggests that any tailwind the industry is benefiting from, Oklo Resources has not been able to reap as much as its industry peers.
What does this mean?
Though Oklo Resources’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 insightful step is to assess company-specific issues Oklo Resources may be facing and whether management guidance has steadily been met in the past. I suggest you continue to research Oklo Resources to get a better picture of the stock by looking at:
1. Financial Health: Is OKU’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.