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 Haoma Mining NL’s (ASX:HAO) 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. See our latest analysis for Haoma Mining
Could HAO beat the long-term trend and outperform its industry?
For the purpose of this commentary, I like to 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 technique allows me to assess many different companies on a more comparable basis, using the latest information. For Haoma Mining, the most recent bottom-line -A$4.7M, which, in comparison to the previous year’s figure, has become less negative. Given that these figures may be fairly myopic, I have determined an annualized five-year figure for Haoma Mining’s earnings, which stands at -A$2.6M. This shows that, Haoma Mining has historically performed better than recently, though it seems like earnings are now heading back towards a more favorable position once more.
Additionally, we can analyze Haoma Mining’s loss by looking at what’s going on in the industry on top of within the company. Firstly, I want to quickly look into the line items. Revenue growth over last couple of years has risen by a mere 7.97%. Given that top-line growth is also pretty flat, the key to profitability moving forward would be managing cost growth rates. Scanning growth from a sector-level, the Australian metals and mining industry has been growing, albeit, at a unexciting single-digit rate of 6.76% in the past twelve months, and a substantial 10.06% over the previous five years. This shows that, even though Haoma Mining is currently running a loss, it may have benefited from industry tailwinds, moving earnings into a more favorable position.
What does this mean?
Though Haoma Mining’s past data is helpful, it is only one aspect of my investment thesis. 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 examine company-specific issues Haoma Mining may be facing and whether management guidance has steadily been met in the past. I recommend you continue to research Haoma Mining to get a better picture of the stock by looking at:
1. Financial Health: Is HAO’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.