Athersys Inc (NASDAQ:ATHX): Should The Recent Earnings Drop Worry You?
Assessing Athersys Inc’s (NASDAQ:ATHX) performance as a company requires looking at more than just a years’ earnings data. Below, I will run you through a simple sense check to build perspective on how Athersys is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its biotechs industry peers. View our latest analysis for Athersys
Despite a decline, did ATHX underperform the long-term trend and the industry?
I look at data from the most recent 12 months, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This technique enables me to examine various companies on a similar basis, using the latest information. For Athersys, its most recent earnings (trailing twelve month) is -US$32.24M, which, in comparison to the previous year’s figure, has become more negative. Since these figures are fairly nearsighted, I’ve determined an annualized five-year figure for ATHX’s net income, which stands at -US$19.45M. 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 analyze Athersys’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Athersys’s top-line has risen by a mere 4.55%, on average. The company’s inability to breakeven has been aided by the relatively flat top-line in the past. Scanning growth from a sector-level, the US biotechs industry has been growing its average earnings by double-digit 21.75% over the past twelve months, and 17.76% over the last five years. This shows that whatever uplift the industry is profiting from, Athersys has not been able to realize the gains unlike its average peer.
What does this mean?
Athersys’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 envisage what will happen in the future and when. The most useful step is to assess company-specific issues Athersys may be facing and whether management guidance has dependably been met in the past. You should continue to research Athersys to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for ATHX’s future growth? Take a look at our free research report of analyst consensus for ATHX’s outlook.
Financial Health: Is ATHX’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.
