Does Endologix Inc’s (NASDAQ:ELGX) Earnings Growth Make It An Outperformer?
When Endologix Inc (NASDAQ:ELGX) released its most recent earnings update (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 Endologix 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 ELGX has performed. View our latest analysis for Endologix
Could ELGX beat the long-term trend and outperform its industry?
For the most up-to-date info, I use the ‘latest twelve-month’ data, 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 enables me to examine different stocks on a similar basis, using the most relevant data points. For Endologix, its most recent trailing-twelve-month earnings is -$76.8M, which, relative to the previous year’s figure, has become less negative. Given that these figures may be somewhat nearsighted, I’ve computed an annualized five-year figure for Endologix’s earnings, which stands at -$50.0M. This means that, Endologix has historically performed better than recently, though it seems like earnings are now heading back in the right direction again.
Additionally, we can analyze Endologix’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 increased by 14.16%, implying that Endologix is in a high-growth period with expenses shooting ahead of elevated top-line growth rates, leading to yearly losses. Viewing growth from a sector-level, the US medical equipment industry has been growing its average earnings by double-digit 18.95% over the prior year, and a more subdued 9.07% over the past couple of years. This means while Endologix is currently unprofitable, it may have been aided by industry tailwinds, moving earnings into a more favorable position.
What does this mean?
Though Endologix’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always hard to forecast what will occur going forward, and when. The most insightful step is to examine company-specific issues Endologix may be facing and whether management guidance has regularly been met in the past. I recommend you continue to research Endologix to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for ELGX’s future growth? Take a look at our free research report of analyst consensus for ELGX’s outlook.
2. Financial Health: Is ELGX’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.
