After reading CEL-SCI Corporation’s (AMEX:CVM) most recent earnings announcement (31 December 2017), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. 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 CEL-SCI’s performance has been impacted by industry movements. In this article I briefly touch on my key findings. View our latest analysis for CEL-SCI
Was CVM’s recent earnings decline indicative of a tough track record?
To account for any quarterly or half-yearly updates, I 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 allows me to assess different stocks on a similar basis, using new information. For CEL-SCI, its latest trailing-twelve-month earnings is -US$24.14M, which, in comparison to the prior year’s level, has become more negative. Given that these figures may be fairly short-term thinking, I’ve computed an annualized five-year figure for CEL-SCI’s net income, which stands at -US$20.42M. This doesn’t seem to paint a better picture, since earnings seem to have gradually been getting more and more negative over time.
We can further evaluate CEL-SCI’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years CEL-SCI has seen an annual decline in revenue of -13.75%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Eyeballing growth from a sector-level, the US biotechs industry has been growing its average earnings by double-digit 22.93% over the past year, and 20.25% over the past five years. This means that whatever uplift the industry is benefiting from, CEL-SCI has not been able to realize the gains unlike its industry 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 difficult to predict what will occur going forward, and when. The most useful step is to assess company-specific issues CEL-SCI may be facing and whether management guidance has consistently been met in the past. I suggest you continue to research CEL-SCI to get a more holistic view of the stock by looking at:
- 1. Financial Health: Is CVM’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.
- 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 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.