Investors with a long-term horizong may find it valuable to assess Wolf Minerals Limited’s (ASX:WLF) earnings trend over time and against its industry benchmark as opposed to simply looking at a sincle earnings announcement at one point in time. Below is my commentary, albiet very simple and high-level, on how Wolf Minerals is currently performing. View our latest analysis for Wolf Minerals
Was WLF’s recent earnings decline indicative of a tough track record?
To account for any quarterly or half-yearly updates, I 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 allows me to analyze various companies on a more comparable basis, using new information. Wolf Minerals’s latest earnings -A$74.5M, which compared to last year’s figure, has become more negative. Given that these figures are fairly short-term, I have calculated an annualized five-year value for WLF’s earnings, which stands at -A$19.8M. This doesn’t look much better, since earnings seem to have gradually been getting more and more negative over time.
Additionally, we can examine Wolf Minerals’s loss by researching what’s going on 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 grew by 69.83%, implying that Wolf Minerals is in a high-growth phase with expenses racing ahead high top-line growth rates. Scanning growth from a sector-level, the Australian metals and mining industry has been growing, albeit, at a muted single-digit rate of 6.76% over the past year, and a substantial 11.62% over the previous few years. This means any tailwind the industry is deriving benefit from, Wolf Minerals has not been able to leverage it as much as its industry peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that incur net loss is always difficult to envisage what will occur going forward, and when. The most insightful step is to examine company-specific issues Wolf Minerals may be facing and whether management guidance has steadily been met in the past. I recommend you continue to research Wolf Minerals to get a more holistic view of the stock by looking at:
1. Financial Health: Is WLF’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.
2. 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 last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. 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.