For investors with a long-term horizon, assessing earnings trend over time and against industry benchmarks is more valuable than looking at a single earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on Allied Healthcare Products Inc (NASDAQ:AHPI) useful as an attempt to give more color around how Allied Healthcare Products is currently performing. Check out our latest analysis for Allied Healthcare Products
Was AHPI’s recent earnings decline indicative of a tough track record?
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 technique allows me to examine various companies on a similar basis, using new information. For Allied Healthcare Products, its latest earnings (trailing twelve month) is -US$2.54M, which, in comparison to last year’s figure, has become more negative. Given that these figures may be somewhat nearsighted, I’ve computed an annualized five-year value for Allied Healthcare Products’s earnings, which stands at -US$1.64M. This doesn’t seem to paint a better picture, as earnings seem to have consistently been getting more and more negative over time.
We can further evaluate Allied Healthcare Products’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Allied Healthcare Products has seen an annual decline in revenue of -4.93%, 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 medical equipment industry has been growing, albeit, at a muted single-digit rate of 8.02% over the previous year, and 8.70% over the past half a decade. This means any tailwind the industry is benefiting from, Allied Healthcare Products has not been able to reap as much as its average peer.
What does this mean?
Allied Healthcare Products’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that incur net loss is always hard to predict what will occur going forward, and when. The most useful step is to examine company-specific issues Allied Healthcare Products may be facing and whether management guidance has regularly been met in the past. You should continue to research Allied Healthcare Products to get a more holistic view of the stock by looking at:
- Financial Health: Is AHPI’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 March 2018. 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.