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Measuring Australia United Mining Limited’s (ASX:AYM) track record of past performance is an insightful exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess AYM’s recent performance announced on 30 June 2017 and compare these figures to its historical trend and industry movements. Check out our latest analysis for Australia United Mining

Were AYM’s earnings stronger than its past performances and the industry?

I look at 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 stocks in a uniform manner using the latest information. For Australia United Mining, its most recent trailing-twelve-month earnings is -AU$618.68K, which, relative to the previous year’s figure, has become less negative. Since these values are somewhat nearsighted, I have estimated an annualized five-year figure for AYM’s earnings, which stands at -AU$4.80M. This means that, while net income is negative, it has become less negative over the years.

We can further evaluate Australia United Mining’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Australia United Mining’s revenue growth has been relatively subdued, with an annual growth rate of 1.86%, on average. The company’s inability to breakeven has been aided by the relatively flat top-line in the past. Looking at growth from a sector-level, the Australian metals and mining industry has been growing, albeit, at a unexciting single-digit rate of 8.07% over the previous twelve months, and a substantial 13.69% over the past five years. This means that, even though Australia United Mining is presently unprofitable, 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. With companies that are currently loss-making, it is always difficult to predict what will happen in the future and when. The most insightful step is to examine company-specific issues Australia United Mining may be facing and whether management guidance has regularly been met in the past. I recommend you continue to research Australia United Mining to get a more holistic view of the stock by looking at:

• 1. Financial Health: Is AYM’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 trailing twelve months from 30 June 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.