Does NuVasive Inc’s (NASDAQ:NUVA) Recent Track Record Look Strong?
After reading NuVasive Inc’s (NASDAQ:NUVA) most recent earnings announcement (30 September 2017), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways. View our latest analysis for NuVasive
Were NUVA’s earnings stronger than its past performances 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 enables me to assess different companies on a similar basis, using the most relevant data points. For NuVasive, its most recent trailing-twelve-month earnings is US$65.42M, which, against the previous year’s figure, has increased by a non-trivial 54.76%. Since these figures may be fairly short-term thinking, I have calculated an annualized five-year value for NuVasive’s net income, which stands at US$15.50M This suggests that, on average, NuVasive has been able to increasingly grow its profits over the past few years as well.
What’s enabled this growth? Well, let’s take a look at whether it is merely because of an industry uplift, or if NuVasive has experienced some company-specific growth. Over the last couple of years, NuVasive grew its bottom line faster than revenue by efficiently controlling its costs. This has led to a margin expansion and profitability over time. Inspecting growth from a sector-level, the US medical equipment industry has been growing its average earnings by double-digit 10.69% in the previous year, and a more muted 9.16% over the past half a decade. This means any tailwind the industry is enjoying, NuVasive is capable of leveraging this to its advantage.
What does this mean?
NuVasive’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that have performed well in the past, such as NuVasive gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research NuVasive to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for NUVA’s future growth? Take a look at our free research report of analyst consensus for NUVA’s outlook.
2. Financial Health: Is NUVA’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.
