When Cohiba Minerals Limited’s (ASX:CHK) announced its latest earnings (30 June 2017), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were Cohiba Minerals’s average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not CHK actually performed well. Below is a quick commentary on how I see CHK has performed. Check out our latest analysis for Cohiba Minerals
Did CHK’s recent EPS Growth beat the long-term trend and the industry?
For the purpose of this commentary, I like to use the ‘latest twelve-month’ data, 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 examine different companies on a more comparable basis, using the latest information. For Cohiba Minerals, the latest twelve-month earnings -A$0.9M, which, against the previous year’s figure, has become less negative. Given that these values may be somewhat nearsighted, I have estimated an annualized five-year value for Cohiba Minerals’s net income, which stands at -A$0.6M. This suggests that, Cohiba Minerals has historically performed better than recently, even though it seems like earnings are now heading back towards to right direction again.
We can further analyze Cohiba Minerals’s loss by looking at what’s going on in the industry as well as within the company. Firstly, I want to briefly look into the line items. Revenue growth over last few years has been negative at -43.66%. The key to profitability here is to make sure the company’s cost growth is well-managed. 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% in the past year, and a substantial 10.06% over the previous few years. This suggests that, although Cohiba Minerals is currently loss-making, it may have been aided by industry tailwinds, moving earnings in the right direction.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that incur net loss is always hard to envisage what will happen in the future and when. The most valuable step is to examine company-specific issues Cohiba Minerals may be facing and whether management guidance has regularly been met in the past. I suggest you continue to research Cohiba Minerals to get a more holistic view of the stock by looking at:
1. Financial Health: Is CHK’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.