For long term investors, improvement in profitability and outperformance against the industry can be important characteristics in a stock. In this article, I will take a look at Queensland Bauxite Limited’s (ASX:QBL) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers. View our latest analysis for Queensland Bauxite
Was QBL’s recent earnings decline indicative of a tough track record?
I like to 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 method allows me to analyze different companies in a uniform manner using the most relevant data points. For Queensland Bauxite, the most recent earnings -A$1.9M, which, relative to last year’s level, has become more negative. Given that these figures may be somewhat myopic, I’ve created an annualized five-year value for Queensland Bauxite’s net income, which stands at -A$2.3M. This shows that, despite the fact that net income is negative, it has become less negative over the years.
Additionally, we can assess Queensland Bauxite’s loss by looking at what has been happening in the industry along with within the company. Initially, I want to quickly look into the line items. Revenue growth over past few years has been negative at -57.63%. The key to profitability here is to make sure the company’s cost growth is well-controlled. 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 prior year, and a substantial 10.06% over the past five years. This means whatever tailwind the industry is benefiting from, Queensland Bauxite has not been able to realize the gains unlike its average peer.
What does this mean?
Queensland Bauxite’s track record can be a valuable insight into its earnings performance, but it certainly 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 useful step is to examine company-specific issues Queensland Bauxite may be facing and whether management guidance has dependably been met in the past. I recommend you continue to research Queensland Bauxite to get a better picture of the stock by looking at:
1. Financial Health: Is QBL’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.