For investors, increase in profitability and industry-beating performance can be essential considerations in an investment. Below, I will examine Cradle Resources Limited’s (ASX:CXX) track record on a high level, to give you some insight into how the company has been performing against its long term trend and its industry peers. See our latest analysis for CXX
Did CXX’s recent EPS Growth beat the long-term trend and the industry?
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 blend enables me to assess various companies on a similar basis, using the most relevant data points. Cradle Resources’s most recent twelve-month earnings -A$1.7M, which, relative to the prior year’s figure, has become less negative. Since these figures may be somewhat short-term, I have determined an annualized five-year figure for CXX’s net income, which stands at -A$3.3M. This means that, although net income is negative, it has become less negative over the years.
Additionally, we can evaluate Cradle Resources’s loss by looking at what has been happening in the industry along with within the company. Firstly, I want to briefly look into the line items. Revenue growth over last couple of years has been negative at -52.77%. 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 subdued single-digit rate of 6.76% in the past year, and a substantial 10.06% over the previous few years. This suggests that, while Cradle Resources is currently loss-making, it may have benefited from industry tailwinds, moving earnings in the right direction.
What does this mean?
Though Cradle Resources’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always hard to forecast what will happen in the future and when. The most valuable step is to assess company-specific issues Cradle Resources may be facing and whether management guidance has steadily been met in the past. I suggest you continue to research Cradle Resources to get a better picture of the stock by looking at:
1. Financial Health: Is CXX’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.