With A -50.74% Earnings Drop, Is ArQule Inc’s (NASDAQ:ARQL) Performance A Concern?
Measuring ArQule Inc’s (NASDAQ:ARQL) track record of past performance is a useful exercise for investors. It enables us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess ARQL’s recent performance announced on 30 September 2017 and weigh these figures against its long-term trend and industry movements. View our latest analysis for ArQule
Was ARQL weak performance lately part of a long-term decline?
I look at data from the most recent 12 months, 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 allows me to examine various companies on a more comparable basis, using the most relevant data points. For ArQule, its most recent bottom-line (trailing twelve month) is -US$28.26M, which, relative to the previous year’s level, has become more negative. Given that these values are somewhat myopic, I’ve created an annualized five-year figure for ArQule’s earnings, which stands at -US$18.76M. This doesn’t look much better, as earnings seem to have gradually been getting more and more negative over time.
We can further assess ArQule’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade ArQule has seen an annual decline in revenue of -34.85%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Scanning growth from a sector-level, the US biotechs industry has been growing its average earnings by double-digit 21.50% over the past twelve months, and 19.51% over the last five years. This suggests that whatever uplift the industry is enjoying, ArQule has not been able to gain as much as its industry peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that incur net loss is always difficult to predict what will happen in the future and when. The most useful step is to examine company-specific issues ArQule may be facing and whether management guidance has regularly been met in the past. I suggest you continue to research ArQule to get a better picture of the stock by looking at the areas below. Just a heads up – to access some parts of the Simply Wall St research tool you might be asked to create a free account, but it takes just one click and the information they provide is definitely worth it in my opinion.
1. Future Outlook: What are well-informed industry analysts predicting for ARQL’s future growth? Take a look at this free research report of analyst consensus for ARQL’s outlook.
2. Financial Health: Is ARQL’s operations financially sustainable? Balance sheets can be hard to analyze, which is why Simply Wall St does it for you. Check out important financial health checks here.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore a free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 September 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.
