Measuring InspireMD Inc’s (NYSEMKT:NSPR) track record of past performance is a useful exercise for investors. It enables us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess NSPR’s recent performance announced on 30 June 2018 and weigh these figures against its long-term trend and industry movements.
Did NSPR perform worse than its track record and industry?
NSPR is loss-making, with the most recent trailing twelve-month earnings of -US$11m (from 30 June 2018), which compared to last year has become more negative. However, the company’s loss seem to be contracting over the medium term, with the five-year earnings average of -US$18m. Each year, for the past five years NSPR has seen an annual decline in revenue of -19%, on average. This adverse movement is a driver of the company’s inability to reach breakeven.
Inspecting growth from a sector-level, the US medical equipment industry has been growing, albeit, at a subdued single-digit rate of 7.3% in the previous year, and a substantial 12% over the previous five years. This growth is a median of profitable companies of 25 Medical Equipment companies in US including WNDM Medical, Pro-Dex and LivaNova. This suggests that any tailwind the industry is benefiting from, InspireMD has not been able to reap as much as its average peer.
Given that InspireMD is not profitable, even if operating expenses (SG&A and one-year R&D) continues to fall at previous year’s rate of -24%, the company’s current cash level (US$6m) will still be insufficient to cover its expenses in the upcoming year. This is not a great sign in terms of operations and cash management. Even though this is analysis is fairly basic, and InspireMD still can cut its overhead further, or open a new line of credit instead of issuing new equity shares, the outcome of this analysis still helps us understand how sustainable the InspireMD’s operation is, and when things may have to change.
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 useful step is to assess company-specific issues InspireMD may be facing and whether management guidance has regularly been met in the past. I recommend you continue to research InspireMD to get a more holistic view of the stock by looking at:
- Financial Health: Are NSPR’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 30 June 2018. This may not be consistent with full year annual report figures.
To help readers see past 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. For errors that warrant correction please contact the editor at email@example.com.