When Novavax Inc (NASDAQ:NVAX) announced its most recent earnings (30 September 2017), I did two things: looked at its past earnings track record, then look at what is happening in the industry. Understanding how Novavax performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see NVAX has performed. See our latest analysis for Novavax
How NVAX fared against its long-term earnings performance and its industry
To account for any quarterly or half-yearly updates, I use the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This technique enables me to analyze different companies on a more comparable basis, using the latest information. For Novavax, its latest trailing-twelve-month earnings is -$190.0M, which, relative to the previous year’s figure, has become less negative. Given that these values may be somewhat short-term, I’ve determined an annualized five-year value for Novavax’s net income, which stands at -$103.4M. This means Novavax has historically performed better than recently, though it seems like earnings are now heading back towards to right direction again.
We can further assess Novavax’s loss by looking at 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 last few years has risen by 10.43%, implying that Novavax is in a high-growth period with expenses shooting ahead of elevated top-line growth rates, leading to yearly losses. Scanning growth from a sector-level, the US biotechs industry has been growing its average earnings by double-digit 12.32% over the previous twelve months, and 19.86% over the previous five years. This means despite the fact that Novavax is currently running a loss, it may have benefited from industry tailwinds, moving earnings in the right direction.
What does this mean?
Though Novavax’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 happen in the future and when. The most insightful step is to examine company-specific issues Novavax may be facing and whether management guidance has steadily been met in the past. You should continue to research Novavax to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for NVAX’s future growth? Take a look at our free research report of analyst consensus for NVAX’s outlook.
2. Financial Health: Is NVAX’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.