Measuring Horseshoe Metals Limited’s (ASX:HOR) 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 HOR’s recent performance announced on 30 June 2017 and weigh these figures against its long-term trend and industry movements. View our latest analysis for Horseshoe Metals
Did HOR beat its long-term earnings growth trend and 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 enables me to analyze different stocks on a more comparable basis, using the most relevant data points. For Horseshoe Metals, the latest earnings -A$0.9M, which compared to last year’s figure, has become less negative. Since these values are relatively short-term thinking, I have estimated an annualized five-year value for Horseshoe Metals’s net income, which stands at -A$2.5M. This means that, even though net income is negative, it has become less negative over the years.
Additionally, we can analyze Horseshoe Metals’s loss by looking at what has been happening in the industry as well as within the company. Firstly, I want to briefly look into the line items. Revenue growth over last couple of years has been negative at -37.59%. The key to profitability here is to make sure the company’s cost growth is well-controlled. Inspecting growth from a sector-level, the Australian metals and mining industry has been growing, albeit, at a subdued single-digit rate of 6.76% in the prior year, and a substantial 10.06% over the previous five years. This means that, even though Horseshoe Metals is presently unprofitable, it may have benefited from industry tailwinds, moving earnings towards to 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 Horseshoe Metals may be facing and whether management guidance has dependably been met in the past. I recommend you continue to research Horseshoe Metals to get a better picture of the stock by looking at:
1. Financial Health: Is HOR’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.