Does Epizyme Inc’s (NASDAQ:EPZM) Past Performance Indicate A Weaker Future?
Examining Epizyme Inc’s (NASDAQ:EPZM) past track record of performance is a valuable exercise for investors. It enables us to understand whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess EPZM’s latest performance announced on 30 September 2017 and weigh these figures against its longer term trend and industry movements. Check out our latest analysis for Epizyme
Was EPZM’s recent earnings decline indicative of a tough track record?
I prefer to use data from the most recent 12 months, 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 allows me to analyze many different companies in a uniform manner using new information. For Epizyme, its latest twelve-month earnings is -$133.2M, which, relative to the prior year’s figure, has become more negative. Given that these values may be relatively short-term thinking, I have computed an annualized five-year figure for Epizyme’s earnings, which stands at -$67.7M. This doesn’t look much better, since earnings seem to have gradually been getting more and more negative over time.
Additionally, we can examine Epizyme’s loss by researching what has been happening in the industry as well as within the company. Firstly, I want to quickly look into the line items. Revenue growth over the past few years has been negative at -30.34%. The key to profitability here is to make sure the company’s cost growth is well-controlled. Scanning growth from a sector-level, the US biotechnology industry has been growing its average earnings by double-digit 11.07% over the past year, and 20.18% over the previous five years. This suggests that any uplift the industry is enjoying, Epizyme has not been able to leverage it as much as its average peer.
What does this mean?
Though Epizyme’s past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always difficult to forecast what will occur going forward, and when. The most useful step is to assess company-specific issues Epizyme may be facing and whether management guidance has dependably been met in the past. I suggest you continue to research Epizyme to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for EPZM’s future growth? Take a look at our free research report of analyst consensus for EPZM’s outlook.
2. Financial Health: Is EPZM’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.
