For investors with a long-term horizon, examining earnings trend over time and against industry peers is more insightful than looking at an earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on Sandfire Resources NL (ASX:SFR) useful as an attempt to give more color around how Sandfire Resources NL is currently performing. Check out our latest analysis for Sandfire Resources NL
Commentary On SFR’s Past Performance
I like to use data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This blend allows me to analyze different companies on a similar basis, using the latest information. For Sandfire Resources NL, the latest twelve-month earnings is A$77.5M, which compared to last year’s level, has moved up by a non-trivial 61.55%. Given that these figures may be relatively short-term, I have determined an annualized five-year value for SFR’s net income, which stands at A$41.1M. This means that, generally, Sandfire Resources NL has been able to consistently improve its bottom line over the last few years as well.
What’s enabled this growth? Well, let’s take a look at if it is merely due to industry tailwinds, or if Sandfire Resources NL has seen some company-specific growth. In the past couple of years, Sandfire Resources NL increased its bottom line faster than revenue by successfully controlling its costs. This brought about a margin expansion and profitability over time. Viewing growth from a sector-level, the Australian metals and mining industry has been growing, albeit, at a muted single-digit rate of 6.76% over the previous year, and a substantial 11.62% over the previous few years. This means any tailwind the industry is gaining from, Sandfire Resources NL is able to amplify this to its advantage.
What does this mean?
Sandfire Resources NL’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that have performed well in the past, such as Sandfire Resources NL gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research Sandfire Resources NL to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for SFR’s future growth? Take a look at our free research report of analyst consensus for SFR’s outlook.