When EDAP TMS SA. (NASDAQ:EDAP) announced its most recent earnings (31 December 2017), I did two things: looked at its past earnings track record, then look at what is happening in the industry. Understanding how EDAP TMS performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see EDAP has performed. View our latest analysis for EDAP TMS
Despite a decline, did EDAP underperform the long-term trend and the industry?
I 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 blend allows me to analyze many different companies on a similar basis, using the latest information. For EDAP TMS, its latest earnings (trailing twelve month) is -€681.00K, which, relative to the prior year’s level, has turned from positive to negative. Given that these values may be fairly myopic, I have computed an annualized five-year figure for EDAP TMS’s earnings, which stands at -€2.34M. This means although net income is negative, it has become less negative over the years.
We can further analyze EDAP TMS’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years EDAP TMS’s top-line has grown by a mere 8.42%, on average. The company’s inability to breakeven has been aided by the relatively flat top-line in the past. Eyeballing growth from a sector-level, the US medical equipment industry has been growing, albeit, at a unexciting single-digit rate of 6.61% in the past twelve months, and a substantial 10.11% over the last five years. This means any tailwind the industry is profiting from, EDAP TMS has not been able to realize the gains unlike its industry peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. With companies that are currently loss-making, it is always difficult to predict what will happen in the future and when. The most useful step is to examine company-specific issues EDAP TMS may be facing and whether management guidance has dependably been met in the past. I recommend you continue to research EDAP TMS to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for EDAP’s future growth? Take a look at our free research report of analyst consensus for EDAP’s outlook.
- Financial Health: Is EDAP’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 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.