With A -53.98% Earnings Drop, Is InspireMD Inc’s (NYSEMKT:NSPR) Performance A Concern?
When InspireMD Inc (AMEX:NSPR) released its most recent earnings update (31 December 2017), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Understanding how InspireMD performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see NSPR has performed. Check out our latest analysis for InspireMD
Commentary On NSPR’s Past Performance
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 method allows me to assess many different companies on a more comparable basis, using new information. For InspireMD, its most recent bottom-line (trailing twelve month) is -US$13.03M, which, against the prior year’s level, has become more negative. Since these values are somewhat short-term thinking, I’ve calculated an annualized five-year figure for NSPR’s earnings, which stands at -US$16.83M. This means although net income is negative, it has become less negative over the years.
We can further assess InspireMD’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years InspireMD has seen an annual decline in revenue of -15.89%, 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 medical equipment industry has been growing its average earnings by double-digit 11.06% over the past year, and a more muted 9.16% over the past five years. This shows that any uplift the industry is profiting from, InspireMD has not been able to realize the gains unlike its industry peers.
What does this mean?
Though InspireMD’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always difficult to forecast what will happen in the future and when. The most valuable step is to assess company-specific issues InspireMD may be facing and whether management guidance has dependably been met in the past. I suggest you continue to research InspireMD to get a more holistic view of the stock by looking at:
1. Financial Health: Is NSPR’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.
