Measuring Novelion Therapeutics Inc’s (NASDAQ:NVLN) 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 NVLN’s recent performance announced on 31 December 2017 and weigh these figures against its long-term trend and industry movements. View our latest analysis for Novelion Therapeutics
Was NVLN’s recent earnings decline worse than the long-term trend and the industry?
I like 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 method allows me to assess many different companies on a more comparable basis, using new information. For Novelion Therapeutics, its most recent earnings (trailing twelve month) is -US$126.71M, which, relative to the previous year’s level, has become more negative. Since these figures are relatively nearsighted, I have calculated an annualized five-year figure for Novelion Therapeutics’s net income, which stands at -US$39.27M. This doesn’t seem to paint a better picture, as earnings seem to have gradually been getting more and more negative over time.
We can further analyze Novelion Therapeutics’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Novelion Therapeutics’s top-line has risen by 26.20% on average, implying that the company is in a high-growth phase with expenses shooting ahead of revenues, leading to annual losses. Looking at growth from a sector-level, the US biotechs industry has been growing its average earnings by double-digit 23.61% over the past twelve months, and 20.00% over the past five years. This means whatever tailwind the industry is enjoying, Novelion Therapeutics has not been able to realize the gains unlike its average peer.
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 hard to predict what will occur going forward, and when. The most insightful step is to examine company-specific issues Novelion Therapeutics may be facing and whether management guidance has regularly been met in the past. I suggest you continue to research Novelion Therapeutics to get a more holistic view of the stock by looking at:
- 1. Future Outlook: What are well-informed industry analysts predicting for NVLN’s future growth? Take a look at our free research report of analyst consensus for NVLN’s outlook.
- 2. Financial Health: Is NVLN’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 31 December 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.