Does Soleno Therapeutics Inc’s (NASDAQ:SLNO) Past Performance Indicate A Weaker Future?
When Soleno Therapeutics Inc (NASDAQ:SLNO) released its most recent earnings update (30 September 2017), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well Soleno Therapeutics has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I’ve summarized the key takeaways on how I see SLNO has performed. View our latest analysis for Soleno Therapeutics
Commentary On SLNO’s Past Performance
I like to use data from the most recent 12 months, 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 allows me to examine different companies on a more comparable basis, using the most relevant data points. For Soleno Therapeutics, its most recent earnings (trailing twelve month) is -US$17.99M, which, against last year’s level, has become more negative. Given that these values are relatively short-term, I have estimated an annualized five-year figure for Soleno Therapeutics’s net income, which stands at -US$11.90M. This doesn’t look much better, since earnings seem to have steadily been getting more and more negative over time.
We can further evaluate Soleno Therapeutics’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Soleno Therapeutics’s top-line has increased by 16.38% on average, indicating that the company is in a high-growth phase with expenses racing ahead 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 24.94% in the previous twelve months, and 20.25% over the past five. This means that whatever uplift the industry is benefiting from, Soleno Therapeutics has not been able to leverage it as much as its industry peers.
What does this mean?
Soleno Therapeutics’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. With companies that are currently loss-making, it is always hard to predict what will happen in the future and when. The most valuable step is to examine company-specific issues Soleno Therapeutics may be facing and whether management guidance has regularly been met in the past. I suggest you continue to research Soleno Therapeutics to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for SLNO’s future growth? Take a look at our free research report of analyst consensus for SLNO’s outlook.
2. Financial Health: Is SLNO’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.
