When Cesca Therapeutics Inc (NASDAQ:KOOL) announced its most recent earnings (31 December 2017), I did two things: looked at its past earnings track record, then look at what is happening in the industry. Understanding how Cesca Therapeutics performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see KOOL has performed. View our latest analysis for Cesca Therapeutics
How Well Did KOOL Perform?
I prefer to 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 enables me to assess many different companies on a more comparable basis, using the latest information. For Cesca Therapeutics, its latest trailing-twelve-month earnings is -US$5.53M, which, in comparison to the prior year’s level, has become less negative. Given that these figures may be fairly nearsighted, I have estimated an annualized five-year value for Cesca Therapeutics’s earnings, which stands at -US$12.17M. This means that, though net income is negative, it has become less negative over the years.
We can further evaluate Cesca Therapeutics’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Cesca Therapeutics has seen an annual decline in revenue of -8.38%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Viewing growth from a sector-level, the US medical equipment industry has been growing its average earnings by double-digit 10.69% in the prior year, and 10.37% over the past half a decade. This means that, despite the fact that Cesca Therapeutics is currently running a loss, it may have gained from industry tailwinds, moving earnings into a more favorable position.
What does this mean?
Cesca Therapeutics’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 forecast what will occur going forward, and when. The most useful step is to examine company-specific issues Cesca Therapeutics may be facing and whether management guidance has dependably been met in the past. I suggest you continue to research Cesca Therapeutics to get a more holistic view of the stock by looking at:
- Financial Health: Is KOOL’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.
- Valuation: What is KOOL worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether KOOL is currently mispriced by the market.
- 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.