Today I will examine TRACON Pharmaceuticals Inc’s (NASDAQ:TCON) latest earnings update (30 September 2017) and compare these figures against its performance over the past couple of years, in addition to how the rest of TCON’s industry performed. As a long-term investor, I find it useful to analyze the company’s trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time. See our latest analysis for TRACON Pharmaceuticals
Could TCON beat the long-term trend and outperform its industry?
I use data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This technique enables me to assess various companies on a more comparable basis, using new information. For TRACON Pharmaceuticals, its most recent earnings (trailing twelve month) is -US$18.86M, which, in comparison to the previous year’s figure, has become less negative. Since these figures are relatively short-term thinking, I have calculated an annualized five-year figure for TCON’s net income, which stands at -US$17.31M. This suggests that, TRACON Pharmaceuticals has historically performed better than recently, while it seems like earnings are now heading back towards a more favorable position once more.
We can further evaluate TRACON Pharmaceuticals’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years TRACON Pharmaceuticals’s top-line has grown by 20.01% on average, implying that the company is in a high-growth phase with expenses shooting ahead of revenues, leading to annual losses. Scanning growth from a sector-level, the US biotechs industry has been growing its average earnings by double-digit 13.11% in the past twelve months, and 19.44% over the past five years. This means despite the fact that TRACON Pharmaceuticals is presently loss-making, it may have gained from industry tailwinds, moving earnings into a more favorable position.
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 difficult to predict what will happen in the future and when. The most insightful step is to assess company-specific issues TRACON Pharmaceuticals may be facing and whether management guidance has regularly been met in the past. You should continue to research TRACON Pharmaceuticals to get a better picture of the stock by looking at:
- 1. Future Outlook: What are well-informed industry analysts predicting for TCON’s future growth? Take a look at our free research report of analyst consensus for TCON’s outlook.
- 2. Financial Health: Is TCON’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.