Measuring New Century Resources Limited’s (ASX:NCZ) track record of past performance is a useful exercise for investors. It enables us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess NCZ’s recent performance announced on 30 June 2017 and weigh these figures against its long-term trend and industry movements. Check out our latest analysis for New Century Resources
Did NCZ perform worse than its track record and industry?
For the purpose of this commentary, I like to use data from the most recent 12 months, 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 examine various companies on a similar basis, using the latest information. New Century Resources’s most recent earnings -A$3.8M, which compared to the previous year’s level, has become more negative. Given that these figures may be relatively short-term thinking, I’ve determined an annualized five-year figure for New Century Resources’s net income, which stands at -A$5.6M. This means though net income is negative, it has become less negative over the years.
Additionally, we can assess New Century Resources’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 last few years has been negative at -20.51%. The key to profitability here is to make sure the company’s cost growth is well-controlled. Looking at 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 prior twelve months, and a substantial 10.06% over the previous five years. This means any tailwind the industry is profiting from, New Century Resources has not been able to gain as much as its industry peers.
What does this mean?
New Century Resources’s track record can be a valuable insight into its earnings performance, but it certainly 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 New Century Resources may be facing and whether management guidance has consistently been met in the past. I suggest you continue to research New Century Resources to get a better picture of the stock by looking at: