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Was China Biologic Products Holdings Inc’s (NASDAQ:CBPO) Earnings Decline Part Of A Broader Industry Downturn?

Ashwin Virk

Assessing China Biologic Products Holdings Inc’s (NASDAQ:CBPO) 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 China Biologic Products Holdings is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its biotechs industry peers. See our latest analysis for China Biologic Products Holdings

Was CBPO’s recent earnings decline indicative of a tough track record?

I prefer to use data from the most recent 12 months, 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 blend allows me to analyze different stocks on a similar basis, using the most relevant data points. For China Biologic Products Holdings, its most recent trailing-twelve-month earnings is US$67.35M, which compared to the prior year’s figure, has plunged by a large -36.01%. Since these values are fairly short-term, I’ve calculated an annualized five-year figure for China Biologic Products Holdings’s earnings, which stands at US$64.68M This suggests that even though earnings declined against the prior year, over the long run, China Biologic Products Holdings’s earnings have been increasing on average.

NasdaqGS:CBPO Income Statement May 31st 18
NasdaqGS:CBPO Income Statement May 31st 18

What’s enabled this growth? Let’s take a look at whether it is merely a result of industry tailwinds, or if China Biologic Products Holdings has experienced some company-specific growth. Over the last few years, China Biologic Products Holdings grew its bottom line faster than revenue by efficiently controlling its costs. This has caused a margin expansion and profitability over time. Scanning growth from a sector-level, the US biotechs industry has been growing its average earnings by double-digit 21.75% in the previous year, and 18.34% over the past five. This shows that any uplift the industry is benefiting from, China Biologic Products Holdings has not been able to gain as much as its average peer.

What does this mean?

While past data is useful, it doesn’t tell the whole story. Companies that are profitable, but have volatile earnings, can have many factors influencing its business. I suggest you continue to research China Biologic Products Holdings to get a better picture of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for CBPO’s future growth? Take a look at our free research report of analyst consensus for CBPO’s outlook.

  2. Financial Health: Is CBPO’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.

  3. 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.