Increase in profitability and industry-beating performance can be essential considerations in a stock for some investors. In this article, I will take a look at Rosan Resources Holdings Limited’s (SEHK:578) 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 Rosan Resources Holdings
Were 578’s earnings stronger than its past performances and the industry?
I like to use the ‘latest twelve-month’ data, 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 method enables me to assess different stocks on a similar basis, using new information. For Rosan Resources Holdings, its most recent bottom-line (trailing twelve month) is -HK$137.68M, which, relative to the prior year’s figure, has become less negative. Since these values are relatively nearsighted, I have computed an annualized five-year figure for 578’s earnings, which stands at -HK$250.31M. This shows that, while net income is negative, it has become less negative over the years.
We can further assess Rosan Resources Holdings’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Rosan Resources Holdings’s top-line has risen by a mere 4.86%, on average. The company’s inability to breakeven has been aided by the relatively flat top-line in the past. Looking at growth from a sector-level, the HK oil and gas industry has been growing its average earnings by double-digit 18.37% over the prior twelve months, and a more muted 3.82% over the last five years. This means although Rosan Resources Holdings is presently loss-making, it may have gained from industry tailwinds, moving earnings into a more favorable position.
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 envisage what will happen in the future and when. The most insightful step is to examine company-specific issues Rosan Resources Holdings may be facing and whether management guidance has steadily been met in the past. You should continue to research Rosan Resources Holdings to get a better picture of the stock by looking at:
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1. Financial Health: Is 578’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.
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2. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 June 2017. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.