After looking at Cardiome Pharma Corp’s (TSX:COM) latest earnings announcement (30 September 2017), I found it useful to revisit the company’s performance in the past couple of years and assess this against the most recent figures. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether Cardiome Pharma’s performance has been impacted by industry movements. In this article I briefly touch on my key findings. See our latest analysis for COM
How Well Did COM Perform?
To account for any quarterly or half-yearly updates, I 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 method enables me to examine various companies in a uniform manner using the most relevant data points. For Cardiome Pharma, the most recent bottom-line -$27.1M, which, in comparison to the prior year’s level, has become more negative. Given that these values may be somewhat nearsighted, I have estimated an annualized five-year value for COM’s net income, which stands at -$14.1M. This doesn’t look much better, as earnings seem to have consistently been getting more and more negative over time.
Additionally, we can evaluate Cardiome Pharma’s loss by researching what’s going on in the industry as well as within the company. Firstly, I want to quickly look into the line items. Revenue growth over past few years has grown by a mere 5.49%. Since top-line growth is also pretty stale the key to profitability in the future would be managing costs. Inspecting growth from a sector-level, the Canadian pharmaceuticals industry has been enduring some headwinds in the prior twelve months, leading to an average earnings drop of -25.17%. This is a significant change, given that the industry has constantly been delivering a a strong growth of 44.93% in the previous five years. This shows that any near-term headwind the industry is experiencing, it’s hitting Cardiome Pharma harder than its peers.
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 hard to envisage what will happen in the future and when. The most insightful step is to examine company-specific issues Cardiome Pharma may be facing and whether management guidance has regularly been met in the past. I recommend you continue to research Cardiome Pharma to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for COM’s future growth? Take a look at our free research report of analyst consensus for COM’s outlook.
2. Financial Health: Is COM’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.
3. 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 last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. 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.