Today I will examine Rockwell Medical Inc’s (NASDAQ:RMTI) latest earnings update (31 March 2018) and compare these figures against its performance over the past couple of years, in addition to how the rest of RMTI’s industry performed. As a long-term investor, I find it useful to analyze the company’s trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time. Check out our latest analysis for Rockwell Medical
How Well Did RMTI Perform?
I prefer to 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 enables me to assess many different companies on a more comparable basis, using the latest information. For Rockwell Medical, its most recent earnings (trailing twelve month) is -US$27.71M, which, against the prior year’s figure, has become more negative. Since these values are fairly short-term thinking, I have determined an annualized five-year figure for RMTI’s net income, which stands at -US$28.84M. This shows that, though net income is negative, it has become less negative over the years.
We can further analyze Rockwell Medical’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Rockwell Medical’s top-line has increased by a mere 2.03%, on average. The company’s inability to breakeven has been aided by the relatively flat top-line in the past. Looking at growth from a sector-level, the US medical equipment industry has been growing, albeit, at a subdued single-digit rate of 8.02% in the prior year, and 8.73% over the past five. This shows that whatever tailwind the industry is enjoying, Rockwell Medical has not been able to reap as much as its industry peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that incur net loss is always difficult to predict what will occur going forward, and when. The most valuable step is to assess company-specific issues Rockwell Medical may be facing and whether management guidance has consistently been met in the past. You should continue to research Rockwell Medical to get a more holistic view of the stock by looking at:
- Financial Health: Is RMTI’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.
- 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 March 2018. 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.