Analyzing Thomson Resources Ltd’s (ASX:TMZ) track record of past performance is a valuable exercise for investors. It enables us to reflect on whether or not the company has met expectations, which is a powerful signal for future performance. Today I will assess TMZ’s recent performance announced on 30 June 2017 and compare these figures to its long-term trend and industry movements. Check out our latest analysis for Thomson Resources
Could TMZ beat the long-term trend and outperform its industry?
To account for any quarterly or half-yearly updates, I 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 examine different companies in a uniform manner using new information. For Thomson Resources, its most recent twelve-month earnings is -A$0.1M, which compared to the prior year’s level, has become less negative. Given that these figures are somewhat nearsighted, I’ve calculated an annualized five-year figure for Thomson Resources’s earnings, which stands at -A$1.0M. This means while net income is negative, it has become less negative over the years.
Additionally, we can examine Thomson Resources’s loss by researching what has been happening in the industry as well as within the company. First, I want to briefly look into the line items. Revenue growth over the last few years has been negative at -14.37%. The key to profitability here is to make sure the company’s cost growth is well-managed. Scanning 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 twelve months, and 8.50% over the previous five years. This suggests that, although Thomson 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 Thomson 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 difficult to predict what will occur going forward, and when. The most useful step is to examine company-specific issues Thomson Resources may be facing and whether management guidance has steadily been met in the past. You should continue to research Thomson Resources to get a better picture of the stock by looking at:
1. Financial Health: Is TMZ’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.