Assessing KalNorth Gold Mines Limited’s (ASX:KGM) performance as a company requires looking at more than just a years’ earnings data. Below, I will run you through a simple sense check to build perspective on how KalNorth Gold Mines is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its metals and mining industry peers. Check out our latest analysis for KalNorth Gold Mines
How Well Did KGM Perform?
For the most up-to-date info, I 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 method enables me to analyze different stocks on a similar basis, using the latest information. KalNorth Gold Mines’s most recent twelve-month earnings -A$0.1M, which, in comparison to last year’s level, has become less negative. Given that these figures may be relatively short-term, I’ve computed an annualized five-year value for KGM’s earnings, which stands at -A$12.6M. This means that, although net income is negative, it has become less negative over the years.
We can further evaluate KalNorth Gold Mines’s loss by researching what’s going on in the industry along with within the company. Initially, I want to quickly look into the line items. Revenue growth over last few years has been negative at -53.82%. The key to profitability here is to make sure the company’s cost growth is well-controlled. Scanning growth from a sector-level, the Australian metals and mining industry has been growing, albeit, at a subdued single-digit rate of 6.76% over the past twelve months, and a substantial 10.06% over the previous few years. This suggests that, although KalNorth Gold Mines is presently loss-making, it may have gained from industry tailwinds, moving earnings into a more favorable position.
What does this mean?
KalNorth Gold Mines’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 hard to envisage what will occur going forward, and when. The most valuable step is to examine company-specific issues KalNorth Gold Mines may be facing and whether management guidance has steadily been met in the past. I suggest you continue to research KalNorth Gold Mines to get a more holistic view of the stock by looking at:
1. Financial Health: Is KGM’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.