Examining how Ampio Pharmaceuticals Inc (AMEX:AMPE) is performing as a company requires looking at more than just a years’ earnings. Below, I will run you through a simple sense check to build perspective on how Ampio Pharmaceuticals is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its pharmaceuticals industry peers. Check out our latest analysis for Ampio Pharmaceuticals
How AMPE fared against its long-term earnings performance and its industry
I 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 method allows me to assess different stocks in a uniform manner using new information. For Ampio Pharmaceuticals, its most recent earnings (trailing twelve month) is -$12.1M, which, against the previous year’s level, has become less negative. Since these figures are fairly short-term, I have computed an annualized five-year value for AMPE’s net income, which stands at -$20.6M. This means that, although net income is negative, it has become less negative over the years.
Additionally, we can examine Ampio Pharmaceuticals’s loss by looking at what’s going on in the industry as well as within the company. Initially, I want to quickly look into the line items. Revenue growth over the last few years has grown by 14.01%, signalling that Ampio Pharmaceuticals is in a high-growth period with expenses shooting ahead of elevated top-line growth rates, leading to yearly losses. Looking at growth from a sector-level, the US pharmaceuticals industry has been growing, albeit, at a subdued single-digit rate of 6.66% in the previous twelve months, and a substantial 11.55% over the past couple of years. This suggests that, despite the fact that Ampio Pharmaceuticals is currently unprofitable, it may have gained from industry tailwinds, moving earnings into a more favorable position.
What does this mean?
Ampio Pharmaceuticals’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 difficult to forecast what will happen in the future and when. The most valuable step is to assess company-specific issues Ampio Pharmaceuticals may be facing and whether management guidance has steadily been met in the past. I recommend you continue to research Ampio Pharmaceuticals to get a more holistic view of the stock by looking at:
1. Financial Health: Is AMPE’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 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.