Assessing Peak Resources Limited’s (ASX:PEK) past track record of performance is a useful exercise for investors. It allows us to understand whether the company has met or exceed expectations, which is a great indicator for future performance. Below, I assess PEK’s latest performance announced on 30 June 2017 and evaluate these figures to its historical trend and industry movements. See our latest analysis for Peak Resources
Did PEK’s recent EPS Growth beat the long-term trend and the industry?
I like to use data from the most recent 12 months, 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 enables me to analyze various companies in a uniform manner using the most relevant data points. Peak Resources’s latest earnings -A$4.9M, which, in comparison to the previous year’s level, has become less negative. Since these figures may be relatively short-term, I have estimated an annualized five-year value for Peak Resources’s net income, which stands at -A$5.4M. This means that, though net income is negative, it has become less negative over the years.
Additionally, we can evaluate Peak Resources’s loss by researching what’s going on in the industry as well as within the company. First, I want to briefly look into the line items. Revenue growth over the last couple of years has been negative at -22.68%. The key to profitability here is to make sure the company’s cost growth is well-controlled. Looking at growth from a sector-level, the Australian metals and mining industry has been growing, albeit, at a unexciting single-digit rate of 7.36% over the prior year, and 8.50% over the previous few years. This means that, although Peak Resources is presently running a loss, 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. 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 Peak Resources may be facing and whether management guidance has regularly been met in the past. You should continue to research Peak Resources to get a better picture of the stock by looking at:
1. Financial Health: Is PEK’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. Valuation: What is PEK worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether PEK is currently mispriced by the market.