Examining how Excelsior Gold Limited (ASX:EXG) is performing as a company requires looking at more than just a years’ earnings. Below, I will run you through a simple sense check to build perspective on how Excelsior Gold 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 Excelsior Gold
How Well Did EXG Perform?
To account for any quarterly or half-yearly updates, I use the ‘latest twelve-month’ data, 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 technique enables me to analyze many different companies on a similar basis, using the most relevant data points. For Excelsior Gold, the latest earnings -A$0.1M, which, in comparison to last year’s level, has become less negative. Since these figures may be somewhat short-term, I’ve determined an annualized five-year value for Excelsior Gold’s earnings, which stands at -A$5.3M. This suggests that, although net income is negative, it has become less negative over the years.
Additionally, we can examine Excelsior Gold’s loss by looking at what has been happening in the industry as well as within the company. Firstly, I want to briefly look into the line items. Revenue growth over the last few years has grown by 64.44%, implying that Excelsior Gold is in a high-growth phase with expenses racing ahead high top-line growth rates. Looking at growth from a sector-level, the Australian metals and mining industry has been growing, albeit, at a muted single-digit rate of 7.36% in the past year, and 8.50% over the past five years. This shows that, though Excelsior Gold is presently unprofitable, it may have gained from industry tailwinds, moving earnings towards to right direction.
What does this mean?
Though Excelsior Gold’s past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always difficult to forecast what will occur going forward, and when. The most valuable step is to examine company-specific issues Excelsior Gold may be facing and whether management guidance has consistently been met in the past. I suggest you continue to research Excelsior Gold to get a more holistic view of the stock by looking at:
1. Financial Health: Is EXG’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.