When Select Sands Corp (TSXV:SNS) announced its most recent earnings (30 September 2017), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well Select Sands has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I’ve summarized the key takeaways on how I see SNS has performed. Check out our latest analysis for Select Sands
Did SNS perform worse than its track record and industry?
To account for any quarterly or half-yearly updates, I use 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 blend enables me to analyze different stocks on a more comparable basis, using the most relevant data points. For Select Sands, the most recent earnings -CA$6.3M, which compared to the prior year’s figure, has become more negative. Since these figures are relatively short-term thinking, I’ve created an annualized five-year figure for Select Sands’s earnings, which stands at -CA$2.7M. This doesn’t seem to paint a better picture, since earnings seem to have gradually been getting more and more negative over time.
Additionally, we can evaluate Select Sands’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 past couple of years has more than doubled, signalling that Select Sands is in a high-growth phase with expenses shooting ahead of high top-line growth rates. Viewing growth from a sector-level, the Canadian metals and mining industry has been growing its average earnings by double-digit 45.53% in the prior twelve months, and 14.77% over the previous five years. This suggests that any uplift the industry is deriving benefit from, Select Sands has not been able to realize the gains unlike its industry peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. With companies that are currently loss-making, it is always hard to envisage what will happen in the future and when. The most useful step is to assess company-specific issues Select Sands may be facing and whether management guidance has regularly been met in the past. You should continue to research Select Sands to get a more holistic view of the stock by looking at:
1. Financial Health: Is SNS’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.