For investors, increase in profitability and industry-beating performance can be essential considerations in an investment. Below, I will examine Lynas Corporation Limited’s (ASX:LYC) track record on a high level, to give you some insight into how the company has been performing against its long term trend and its industry peers. See our latest analysis for LYC
How Did LYC’s Recent Performance Stack Up Against Its Past?
For the most up-to-date info, I use the ‘latest twelve-month’ data, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This method enables me to examine various companies in a uniform manner using the latest information. Lynas’s most recent earnings -A$14.9M, which compared to last year’s figure, has become less negative. Since these values may be somewhat short-term thinking, I have determined an annualized five-year figure for Lynas’s earnings, which stands at -A$129.0M. This means that, though net income is negative, it has become less negative over the years.
Additionally, we can examine Lynas’s loss by looking at what’s going on in the industry on top of within the company. First, I want to quickly look into the line items. Revenue growth over last few years has rose by 51.25%, signalling that Lynas is in a high-growth period with expenses racing ahead high top-line growth rates. Scanning 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 previous year, and a substantial 10.06% over the previous few years. This shows that, although Lynas is currently running a loss, it may have gained from industry tailwinds, moving earnings towards to right direction.
What does this mean?
Lynas’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that incur net loss is always hard to envisage what will happen in the future and when. The most insightful step is to examine company-specific issues Lynas may be facing and whether management guidance has consistently been met in the past. You should continue to research Lynas to get a more holistic view of the stock by looking at:
1. Financial Health: Is LYC’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.
2. Valuation: What is LYC worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether LYC is currently mispriced by the market.