Examining Cullen Resources Limited’s (ASX:CUL) past track record of performance is a useful exercise for investors. It allows us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess CUL’s latest performance announced on 30 June 2018 and weight these figures against its longer term trend and industry movements.
How Well Did CUL Perform?
CUL is loss-making, with the most recent trailing twelve-month earnings of -AU$918.0k (from 30 June 2018), which compared to last year has become less negative. However, the company’s loss seem to be contracting over the medium term, with the five-year earnings average of -AU$1.6m. Each year, for the past five years CUL has seen an annual decline in revenue of -31.1%, on average. This adverse movement is a driver of the company’s inability to reach breakeven.
Eyeballing growth from a sector-level, the Australian metals and mining industry has been growing its average earnings by double-digit 23.6% over the prior year, and 16.0% over the past five. This growth is a median of profitable companies of 25 Metals and Mining companies in AU including Neometals, Zimplats Holdings and Orocobre. This means any uplift the industry is enjoying, Cullen Resources has not been able to realize the gains unlike its industry peers.
Although Cullen Resources is loss-making, it has a sufficient cash cushion (AU$431.5k) to pay for its upcoming operating expenses over the next year. This is a strong indication of good cash management.
What does this mean?
Cullen 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 forecast what will occur going forward, and when. The most valuable step is to assess company-specific issues Cullen Resources may be facing and whether management guidance has steadily been met in the past. I recommend you continue to research Cullen Resources to get a more holistic view of the stock by looking at:
- Financial Health: Are CUL’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 30 June 2018. This may not be consistent with full year annual report figures.
To help readers see past 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. For errors that warrant correction please contact the editor at firstname.lastname@example.org.