For investors, increase in profitability and industry-beating performance can be essential considerations in an investment. Below, I will examine Peninsula Mines Limited’s (ASX:PSM) track record on a high level, to give you some insight into how the company has been performing against its long term trend and its industry peers. View our latest analysis for Peninsula Mines
How Well Did PSM Perform?
I prefer 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 blend allows me to examine various companies on a similar basis, using the latest information. For Peninsula Mines, its most recent earnings (trailing twelve month) is -AU$2.54M, which, against last year’s figure, has become more negative. Since these values are relatively nearsighted, I’ve created an annualized five-year value for Peninsula Mines’s earnings, which stands at -AU$1.64M. This doesn’t look much better, since earnings seem to have steadily been getting more and more negative over time.
We can further assess Peninsula Mines’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Peninsula Mines has seen an annual decline in revenue of -24.01%, 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 18.18% over the prior twelve months, and a more muted 8.68% over the past five years. This shows that any tailwind the industry is enjoying, Peninsula Mines has not been able to gain as much as its industry peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. With companies that are currently loss-making, it is always hard to predict what will happen in the future and when. The most valuable step is to assess company-specific issues Peninsula Mines may be facing and whether management guidance has regularly been met in the past. I suggest you continue to research Peninsula Mines to get a better picture of the stock by looking at:
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Financial Health: Is PSM’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.
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Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2017. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.