Yahoo Finance Fresnillo PLC’s (LON:FRES) Earnings Grew 31.29%, Did It Beat Long-Term Trend?
After looking at Fresnillo PLC’s (LSE:FRES) latest earnings update (31 December 2017), I found it helpful to revisit the company’s performance in the past couple of years and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is an important aspect. In this article I briefly touch on my key findings. Check out our latest analysis for Fresnillo
How Did FRES’s Recent Performance Stack Up Against Its Past?
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 technique enables me to assess many different companies on a more comparable basis, using the latest information. For Fresnillo, its latest earnings (trailing twelve month) is US$560.58M, which, relative to the prior year’s figure, has risen by 31.29%. Given that these values may be somewhat nearsighted, I’ve estimated an annualized five-year figure for FRES’s net income, which stands at US$438.45M This shows that, on average, Fresnillo has been able to gradually improve its profits over the past few years as well.
What’s the driver of this growth? Well, let’s take a look at if it is only due to industry tailwinds, or if Fresnillo has seen some company-specific growth. Even 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 has caused a margin contraction, it has moderated Fresnillo’s earnings contraction. Inspecting growth from a sector-level, the UK metals and mining industry has been growing its average earnings by double-digit 28.48% in the prior twelve months, . This is a change from a volatile drop of -3.33% in the last couple of years. This suggests that, in the recent industry expansion, Fresnillo is capable of amplifying this to its advantage.
What does this mean?
Fresnillo’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? You should continue to research Fresnillo to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for FRES’s future growth? Take a look at our free research report of analyst consensus for FRES’s outlook.
Financial Health: Is FRES’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.
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 31 December 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.
