When CEL-SCI Corporation (AMEX:CVM) released its most recent earnings update (30 June 2017), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were CEL-SCI’s average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not CVM actually performed well. Below is a quick commentary on how I see CVM has performed. See our latest analysis for CVM
How CVM fared against its long-term earnings performance and its industry
For the purpose of this commentary, I like to use the ‘latest twelve-month’ data, 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 blend allows me to examine different stocks in a uniform manner using new information. CEL-SCI’s latest earnings -$10M, which, relative to last year’s level, has become less negative. Since these values may be somewhat nearsighted, I’ve calculated an annualized five-year value for CVM’s net income, which stands at -$20M. This means though net income is negative, it has become less negative over the years.
We can further evaluate CEL-SCI’s loss by looking at what’s going on in the industry along with within the company. Firstly, I want to quickly look into the line items. Revenue growth over last few years has been negative at -13.08%. The key to profitability here is to make sure the company’s cost growth is well-managed. Scanning growth from a sector-level, the US biotechnology industry has been growing, albeit, at a unexciting single-digit rate of 8.45% over the previous twelve months, and a substantial 22.54% over the past couple of years. This suggests that, while CEL-SCI is presently loss-making, it may have benefited from industry tailwinds, moving earnings towards to right direction.
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 hard to forecast what will occur going forward, and when. The most valuable step is to assess company-specific issues CEL-SCI may be facing and whether management guidance has regularly been met in the past. You should continue to research CEL-SCI to get a more holistic view of the stock by looking at:
1. Financial Health: Is CVM’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 last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. 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.