Measuring Meteoric Resources NL’s (ASX:MEI) track record of past performance is a useful exercise for investors. It enables us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess MEI’s recent performance announced on 30 June 2017 and weigh these figures against its long-term trend and industry movements. Check out our latest analysis for Meteoric Resources
How Well Did MEI Perform?
I look at 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 technique allows me to analyze different companies in a uniform manner using the latest information. For Meteoric Resources, the latest earnings -A$0.4M, which, relative to the prior year’s level, has become less negative. Since these figures may be relatively short-term thinking, I have computed an annualized five-year value for MEI’s net income, which stands at -A$0.9M. This shows that, despite the fact that net income is negative, it has become less negative over the years.
Additionally, we can assess Meteoric Resources’s loss by looking at what’s going on in the industry as well as within the company. Firstly, I want to quickly look into the line items. Revenue growth over the last few years has risen by 87.38%, implying that Meteoric Resources is in a high-growth phase with expenses shooting ahead of high top-line growth rates. Eyeballing 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 previous twelve months, and a substantial 10.06% over the previous five years. This suggests that, while Meteoric Resources is currently loss-making, it may have been aided by industry tailwinds, moving earnings into a more favorable position.
What does this mean?
Though Meteoric Resources’s past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always hard to forecast what will happen in the future and when. The most useful step is to assess company-specific issues Meteoric Resources may be facing and whether management guidance has consistently been met in the past. You should continue to research Meteoric Resources to get a more holistic view of the stock by looking at:
1. Financial Health: Is MEI’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.