Should You Be Concerned About Neurocrine Biosciences Inc’s (NASDAQ:NBIX) -54.35% Earnings Decline?
After reading Neurocrine Biosciences Inc’s (NASDAQ:NBIX) most recent earnings announcement (30 September 2017), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether Neurocrine Biosciences’s performance has been impacted by industry movements. In this article I briefly touch on my key findings. View our latest analysis for Neurocrine Biosciences
Did NBIX perform worse than its track record and industry?
I prefer to use 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 blend allows me to analyze various companies in a uniform manner using the most relevant data points. For Neurocrine Biosciences, its most recent earnings (trailing twelve month) is -$194.1M, which, in comparison to the previous year’s level, has become more negative. Since these figures may be somewhat myopic, I have determined an annualized five-year figure for Neurocrine Biosciences’s earnings, which stands at -$56.8M. This doesn’t look much better, as earnings seem to have consistently been getting more and more negative over time.
Additionally, we can evaluate Neurocrine Biosciences’s loss by looking at what has been happening in the industry as well as within the company. First, I want to quickly look into the line items. Revenue growth over the last couple of years has been negative at -25.73%. The key to profitability here is to make sure the company’s cost growth is well-controlled. Viewing growth from a sector-level, the US biotechnology industry has been growing its average earnings by double-digit 11.07% in the past twelve months, and 20.18% over the previous few years. This means that whatever tailwind the industry is deriving benefit from, Neurocrine Biosciences has not been able to leverage it as much as its average peer.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that incur net loss is always hard to envisage what will occur going forward, and when. The most useful step is to assess company-specific issues Neurocrine Biosciences may be facing and whether management guidance has consistently been met in the past. I suggest you continue to research Neurocrine Biosciences to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for NBIX’s future growth? Take a look at our free research report of analyst consensus for NBIX’s outlook.
2. Financial Health: Is NBIX’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 30 September 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.
