Adamas Pharmaceuticals Inc’s (NASDAQ:ADMS) Earnings Dropped -49.01%, How Did It Fare Against The Industry?
When Adamas Pharmaceuticals Inc’s (NASDAQ:ADMS) announced its latest earnings (31 December 2017), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were Adamas Pharmaceuticals’s average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not ADMS actually performed well. Below is a quick commentary on how I see ADMS has performed. See our latest analysis for Adamas Pharmaceuticals
Was ADMS’s weak performance lately a part of a long-term decline?
I look at 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 analyze different stocks on a more comparable basis, using the latest information. For Adamas Pharmaceuticals, its latest trailing-twelve-month earnings is -US$89.49M, which, relative to the previous year’s level, has become more negative. Since these figures are fairly myopic, I have computed an annualized five-year value for Adamas Pharmaceuticals’s net income, which stands at -US$24.50M. This doesn’t seem to paint a better picture, as earnings seem to have gradually been getting more and more negative over time.
We can further assess Adamas Pharmaceuticals’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Adamas Pharmaceuticals has seen an annual decline in revenue of -39.25%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Looking at growth from a sector-level, the US biotechs industry has been growing its average earnings by double-digit 22.93% over the past twelve months, and 20.37% over the last five years. This suggests that whatever uplift the industry is enjoying, Adamas Pharmaceuticals has not been able to leverage it as much as its industry peers.
What does this mean?
Adamas Pharmaceuticals’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. With companies that are currently loss-making, it is always hard to forecast what will occur going forward, and when. The most insightful step is to examine company-specific issues Adamas Pharmaceuticals may be facing and whether management guidance has regularly been met in the past. I suggest you continue to research Adamas Pharmaceuticals to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for ADMS’s future growth? Take a look at our free research report of analyst consensus for ADMS’s outlook.
Financial Health: Is ADMS’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.
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.
