Does Catabasis Pharmaceuticals Inc’s (NASDAQ:CATB) Past Performance Indicate A Stronger Future?
In this commentary, I will examine Catabasis Pharmaceuticals Inc’s (NASDAQ:CATB) latest earnings update (31 December 2017) and compare these figures against its performance over the past couple of years, as well as how the rest of the biotechs industry performed. As an investor, I find it beneficial to assess CATB’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time. Check out our latest analysis for Catabasis Pharmaceuticals
How Well Did CATB Perform?
To account for any quarterly or half-yearly updates, 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 allows me to examine many different companies on a similar basis, using the most relevant data points. For Catabasis Pharmaceuticals, its latest trailing-twelve-month earnings is -US$27.36M, which compared to the prior year’s level, has become less negative. Given that these figures are fairly short-term, I have estimated an annualized five-year value for Catabasis Pharmaceuticals’s net income, which stands at -US$28.66M. This shows that, despite the fact that net income is negative, it has become less negative over the years.
We can further analyze Catabasis Pharmaceuticals’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Catabasis Pharmaceuticals’s top-line more than doubled on average, implying that the business 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 21.75% in the prior year, and 18.76% over the previous five years. This suggests that, though Catabasis Pharmaceuticals is currently running a loss, it may have gained from industry tailwinds, moving earnings towards to right direction.
What does this mean?
Catabasis Pharmaceuticals’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that incur net loss is always difficult to envisage what will happen in the future and when. The most insightful step is to assess company-specific issues Catabasis Pharmaceuticals may be facing and whether management guidance has steadily been met in the past. I suggest you continue to research Catabasis Pharmaceuticals to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for CATB’s future growth? Take a look at our free research report of analyst consensus for CATB’s outlook.
Financial Health: Is CATB’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.
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 December 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.
