Epizyme Inc (NASDAQ:EPZM): Does The -21.86% Earnings Drop Reflect A Longer Term Trend?
For investors with a long-term horizon, assessing earnings trend over time and against industry benchmarks is more valuable than looking at a single earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on Epizyme Inc (NASDAQ:EPZM) useful as an attempt to give more color around how Epizyme is currently performing. Check out our latest analysis for Epizyme
How Well Did EPZM Perform?
I 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 blend allows me to assess various companies on a more comparable basis, using the latest information. For Epizyme, its latest earnings (trailing twelve month) is -US$134.31M, which compared to the prior year’s figure, has become more negative. Since these values may be somewhat short-term, I have computed an annualized five-year value for Epizyme’s net income, which stands at -US$70.68M. This doesn’t look much better, as earnings seem to have steadily been getting more and more negative over time.
We can further assess Epizyme’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Epizyme has seen an annual decline in revenue of -30.45%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Scanning growth from a sector-level, the US biotechs industry has been growing its average earnings by double-digit 21.75% over the past twelve months, and 18.76% over the past half a decade. This shows that whatever uplift the industry is profiting from, Epizyme has not been able to realize the gains unlike its industry peers.
What does this mean?
Though Epizyme’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always difficult to envisage what will occur going forward, and when. The most valuable step is to examine company-specific issues Epizyme may be facing and whether management guidance has regularly been met in the past. You should continue to research Epizyme to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for EPZM’s future growth? Take a look at our free research report of analyst consensus for EPZM’s outlook.
Financial Health: Is EPZM’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.