Examining Puma Biotechnology Inc’s (NASDAQ:PBYI) past track record of performance is a valuable exercise for investors. It enables us to understand whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess PBYI’s latest performance announced on 31 December 2017 and weigh these figures against its longer term trend and industry movements. See our latest analysis for Puma Biotechnology
Was PBYI’s recent earnings decline indicative of a tough track record?
For the purpose of this commentary, I like to use data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This enables me to analyze different companies on a similar basis, using the most relevant data points. For Puma Biotechnology, its most recent trailing-twelve-month earnings is -US$292.00M, which, against the previous year’s level, has become more negative. Since these figures may be relatively nearsighted, I’ve computed an annualized five-year value for PBYI’s net income, which stands at -US$157.16M. This doesn’t look much better, since earnings seem to have consistently been getting more and more negative over time.
We can further evaluate Puma Biotechnology’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Puma Biotechnology’s top-line more than doubled on average, indicating that the business is in a high-growth period with expenses racing ahead revenues, leading to annual losses. Inspecting growth from a sector-level, the US biotechs industry has been growing its average earnings by double-digit 22.22% in the past year, and 19.88% over the last five years. This means any tailwind the industry is profiting from, Puma Biotechnology has not been able to leverage it as much as its average peer.
What does this mean?
Though Puma Biotechnology’s past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always hard to predict what will happen in the future and when. The most insightful step is to examine company-specific issues Puma Biotechnology may be facing and whether management guidance has steadily been met in the past. You should continue to research Puma Biotechnology to get a better picture of the stock by looking at the areas below. Just a heads up – to access some parts of the Simply Wall St research tool you might be asked to create a free account, but it takes just one click and the information they provide is definitely worth it in my opinion.
- 1. Future Outlook: What are well-informed industry analysts predicting for PBYI’s future growth? Take a look at this free research report of analyst consensus for PBYI’s outlook.
- 2. Financial Health: Is PBYI’s operations financially sustainable? Balance sheets can be hard to analyze, which is why Simply Wall St does it for you. Check out important financial health checks here.
- 3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore a 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.