After reading Sula Iron & Gold plc’s (AIM:SULA) most recent earnings announcement (31 March 2017), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether Sula Iron & Gold’s performance has been impacted by industry movements. In this article I briefly touch on my key findings. View our latest analysis for Sula Iron & Gold
How SULA fared against its long-term earnings performance and its industry
To account for any quarterly or half-yearly updates, I use the ‘latest twelve-month’ data, 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 allows me to assess different companies on a similar basis, using new information. For Sula Iron & Gold, its most recent bottom-line is -£1.4M, which, against the prior year’s level, has become less negative. Given that these figures are relatively short-term thinking, I’ve computed an annualized five-year value for Sula Iron & Gold’s earnings, which stands at -£1.6M. This means while net income is negative, it has become less negative over the years.
Additionally, we can examine Sula Iron & Gold’s loss by researching what has been happening in the industry as well as within the company. Initially, I want to briefly look into the line items. Revenue growth over the last couple of years has been negative, with the actual revenue level declining by more than half! The key to profitability here is to make sure the company’s cost growth is well-managed. Scanning growth from a sector-level, the UK metals and mining industry has been growing its average earnings by double-digit 36.65% over the past twelve months, . This is a change from a volatile drop of -7.59% in the past few years. This suggests that whatever uplift the industry is profiting from, Sula Iron & Gold has not been able to reap as much as its average peer.
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 predict what will occur going forward, and when. The most insightful step is to assess company-specific issues Sula Iron & Gold may be facing and whether management guidance has dependably been met in the past. I suggest you continue to research Sula Iron & Gold to get a better picture of the stock by looking at: