How Does NovoCure Limited’s (NASDAQ:NVCR) EPS Growth Stack Up Against Industry Performance?
Measuring NovoCure Limited’s (NASDAQ:NVCR) 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 NVCR’s recent performance announced on 30 September 2017 and weigh these figures against its long-term trend and industry movements. Check out our latest analysis for NovoCure
Did NVCR beat its long-term earnings growth trend and its industry?
I use the ‘latest twelve-month’ data, 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 allows me to analyze different stocks on a more comparable basis, using the latest information. NovoCure’s latest twelve-month earnings -$72.9M, which compared to last year’s level, has become less negative. Given that these figures may be somewhat short-term, I’ve created an annualized five-year value for NVCR’s earnings, which stands at -$105.1M. This means that, though net income is negative, it has become less negative over the years.
Additionally, we can analyze NovoCure’s loss by looking at what’s going on in the industry as well as within the company. Firstly, I want to quickly look into the line items. Revenue growth over past few years has rose by 67.42%, indicating that NovoCure is in a high-growth phase with expenses shooting ahead of elevated top-line growth rates. Inspecting growth from a sector-level, the US medical equipment industry has been growing its average earnings by double-digit 18.95% in the previous year, and a less exciting 9.07% over the previous few years. This suggests that, while NovoCure is currently running a loss, it may have gained from industry tailwinds, moving earnings into a more favorable position.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that incur net loss is always hard to forecast what will happen in the future and when. The most valuable step is to assess company-specific issues NovoCure may be facing and whether management guidance has dependably been met in the past. I recommend you continue to research NovoCure to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for NVCR’s future growth? Take a look at our free research report of analyst consensus for NVCR’s outlook.
2. Financial Health: Is NVCR’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.
