Measuring Chesser Resources Limited’s (ASX:CHZ) track record of past performance is a valuable exercise for investors. It allows 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 CHZ’s recent performance announced on 30 June 2017 and compare these figures to its historical trend and industry movements. View our latest analysis for Chesser Resources
Was CHZ weak performance lately part of a long-term decline?
For the purpose of this commentary, I like to use data from the most recent 12 months, 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 examine many different companies on a more comparable basis, using the most relevant data points. Chesser Resources’s most recent earnings -A$0.7M, which, against the previous year’s level, has become more negative. Since these figures may be relatively short-term thinking, I’ve estimated an annualized five-year figure for CHZ’s net income, which stands at -A$2.0M. This suggests that, even though net income is negative, it has become less negative over the years.
Additionally, we can assess Chesser 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 -8.77%. The key to profitability here is to make sure the company’s cost growth is well-managed. Eyeballing growth from a sector-level, the Australian metals and mining industry has been growing, albeit, at a muted single-digit rate of 7.36% over the past twelve months, and 8.50% over the previous few years. This means whatever uplift the industry is profiting from, Chesser Resources has not been able to reap as much as 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 difficult to forecast what will occur going forward, and when. The most valuable step is to assess company-specific issues Chesser Resources may be facing and whether management guidance has steadily been met in the past. You should continue to research Chesser Resources to get a more holistic view of the stock by looking at:
1. Financial Health: Is CHZ’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.