When OZ Minerals Limited (ASX:OZL) released its most recent earnings update (30 June 2017), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well OZ Minerals has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I’ve summarized the key takeaways on how I see OZL has performed. View our latest analysis for OZ Minerals
Could OZL beat the long-term trend and outperform its industry?
For the most up-to-date info, I use data from the most recent 12 months, 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 allows me to analyze various companies in a uniform manner using the most relevant data points. “For OZ Minerals, its “, most recent twelve-month earnings is A$158.9M, which, against the previous year’s figure, has jumped up by 47.27%. Since these values are fairly myopic, I’ve determined an annualized five-year figure for OZL’s net income, which stands at A$94.0M. This suggests that, on average, OZ Minerals has been able to steadily improve its profits over the last few years as well.
What’s the driver of this growth? Well, let’s take a look at if it is merely attributable to industry tailwinds, or if OZ Minerals has seen some company-specific growth. Though both top-line and bottom-line growth rates in the last couple of years, were, on average, negative, earnings were more so. While this brought about a margin contraction, it has cushioned OZ Minerals’s earnings contraction. Inspecting growth from a sector-level, the Australian metals and mining industry has been growing, albeit, at a muted single-digit rate of 7.36% over the previous twelve months, and 8.50% over the past couple of years. This shows that any tailwind the industry is benefiting from, OZ Minerals is able to leverage this to its advantage.
What does this mean?
Though OZ Minerals’s past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I recommend you continue to research OZ Minerals to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for OZL’s future growth? Take a look at our free research report of analyst consensus for OZL’s outlook.