Increase in profitability and industry-beating performance can be essential considerations in a stock for some investors. In this article, I will take a look at Achillion Pharmaceuticals Inc’s (NASDAQ:ACHN) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers. View our latest analysis for Achillion Pharmaceuticals
Was ACHN’s weak performance lately a part of a long-term decline?
To account for any quarterly or half-yearly updates, I use the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This technique enables me to assess different companies in a uniform manner using the most relevant data points. For Achillion Pharmaceuticals, its latest trailing-twelve-month earnings is -US$66.46M, which compared to the prior year’s figure, has become more negative. Since these values are fairly short-term thinking, I’ve determined an annualized five-year value for Achillion Pharmaceuticals’s earnings, which stands at -US$48.46M. 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 assess Achillion Pharmaceuticals’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Achillion Pharmaceuticals’s top-line has risen by 36.61% on average, indicating that the company is in a high-growth phase with expenses shooting ahead of revenues, leading to annual losses. Viewing growth from a sector-level, the US biotechs industry has been growing its average earnings by double-digit 13.27% in the past twelve months, and 19.21% over the last five years. This shows that whatever tailwind the industry is deriving benefit from, Achillion Pharmaceuticals has not been able to realize the gains unlike its average peer.
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 insightful step is to examine company-specific issues Achillion Pharmaceuticals may be facing and whether management guidance has consistently been met in the past. You should continue to research Achillion Pharmaceuticals to get a more holistic view of the stock by looking at:
- 1. Future Outlook: What are well-informed industry analysts predicting for ACHN’s future growth? Take a look at our free research report of analyst consensus for ACHN’s outlook.
- 2. Financial Health: Is ACHN’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 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.