Assessing Valor Resources Limited’s (ASX:VAL) performance as a company requires looking at more than just a years’ earnings data. Below, I will run you through a simple sense check to build perspective on how Valor Resources is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its metals and mining industry peers. See our latest analysis for Valor Resources
Was VAL’s recent earnings decline indicative of a tough track record?
For the most up-to-date info, I 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 allows me to examine various companies on a similar basis, using the most relevant data points. For Valor Resources, its most recent earnings (trailing twelve month) is -A$1.6M, which, in comparison to the previous year’s level, has become more negative. Given that these figures may be relatively nearsighted, I’ve created an annualized five-year value for VAL’s net income, which stands at -A$6.8M. This suggests that, while net income is negative, it has become less negative over the years.
Additionally, we can examine Valor Resources’s loss by looking at 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 past couple of years has been negative at -5.72%. 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 unexciting single-digit rate of 7.36% in the previous twelve months, and a substantial 11.48% over the previous few years. This means that whatever uplift the industry is deriving benefit from, Valor Resources has not been able to reap as much as its average peer.
What does this mean?
Valor Resources’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 difficult to envisage what will happen in the future and when. The most useful step is to examine company-specific issues Valor Resources may be facing and whether management guidance has consistently been met in the past. I suggest you continue to research Valor Resources to get a better picture of the stock by looking at:
1. Financial Health: Is VAL’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.