When Aethlon Medical Inc (NASDAQ:AEMD) announced its most recent earnings (30 September 2017), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well Aethlon Medical has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I’ve summarized the key takeaways on how I see AEMD has performed. View our latest analysis for Aethlon Medical
Could AEMD beat the long-term trend and outperform its industry?
To account for any quarterly or half-yearly updates, I 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 analyze many different companies in a uniform manner using new information. For Aethlon Medical, its most recent earnings is -$6.0M, which, against last year’s figure, has become less negative. Since these values are somewhat short-term thinking, I’ve calculated an annualized five-year value for Aethlon Medical’s earnings, which stands at -$7.1M. This shows that, although net income is negative, it has become less negative over the years.
We can further examine Aethlon Medical’s loss by researching 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 -19.97%. The key to profitability here is to make sure the company’s cost growth is well-managed. Inspecting growth from a sector-level, the US medical equipment industry has been growing its average earnings by double-digit 18.95% over the previous year, and a more subdued 9.07% over the past five years. This suggests that whatever uplift the industry is profiting from, Aethlon Medical 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. With companies that are currently loss-making, it is always hard to envisage what will occur going forward, and when. The most useful step is to examine company-specific issues Aethlon Medical may be facing and whether management guidance has consistently been met in the past. You should continue to research Aethlon Medical to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for AEMD’s future growth? Take a look at our free research report of analyst consensus for AEMD’s outlook.
2. Financial Health: Is AEMD’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 last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. 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.