When Intrexon Corporation (NYSE:XON) released its most recent earnings update (31 March 2018), 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 Intrexon 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 XON has performed. Check out our latest analysis for Intrexon
Did XON beat its long-term earnings growth trend and its industry?
I like to 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 method enables me to assess many different companies on a more comparable basis, using the most relevant data points. For Intrexon, its most recent bottom-line (trailing twelve month) is -US$127.61M, which, against the prior year’s level, has become less negative. Given that these values may be fairly nearsighted, I’ve calculated an annualized five-year figure for XON’s net income, which stands at -US$106.25M. This means Intrexon has historically performed better than recently, though it seems like earnings are now heading back towards to right direction again.
We can further examine Intrexon’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Intrexon’s top-line has increased by 39.20% on average, implying that the company is in a high-growth phase with expenses racing ahead revenues, leading to annual losses. Eyeballing growth from a sector-level, the US biotechs industry has been growing its average earnings by double-digit 21.75% over the previous twelve months, and 18.34% over the past five. This suggests that whatever uplift the industry is profiting from, Intrexon has not been able to leverage it as much as its industry peers.
What does this mean?
Though Intrexon’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always difficult to envisage what will happen in the future and when. The most valuable step is to examine company-specific issues Intrexon may be facing and whether management guidance has dependably been met in the past. I suggest you continue to research Intrexon to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for XON’s future growth? Take a look at our free research report of analyst consensus for XON’s outlook.
- Financial Health: Is XON’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 March 2018. 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.