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How Geron Corporation’s (NASDAQ:GERN) Recent Earnings Fared Against The Long Term Trend

Assessing Geron Corporation’s (NASDAQ:GERN) performance as a company requires looking at more than just a years’ earnings data. Below, I will run you through a simple sense check to build perspective on how Geron is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its biotechs industry peers. See our latest analysis for Geron

Did GERN’s recent earnings growth beat the long-term trend and the industry?

I prefer 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 technique allows me to assess various companies on a similar basis, using new information. For Geron, its latest earnings (trailing twelve month) is -$29.0M, which, relative to last year’s level, has become less negative. Since these figures may be relatively short-term thinking, I have calculated an annualized five-year value for GERN’s net income, which stands at -$50.0M. This means that, although net income is negative, it has become less negative over the years.

NasdaqGS:GERN Income Statement Feb 1st 18
NasdaqGS:GERN Income Statement Feb 1st 18

We can further analyze Geron’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Geron’s top-line has risen by 30.87% on average, signalling that the company is in a high-growth phase with expenses shooting ahead of revenues, leading to annual losses. Viewing growth from a sector-level, the US biotechs industry has been growing its average earnings by double-digit 12.33% in the prior twelve months, and 19.86% over the past five. This means that any tailwind the industry is deriving benefit from, Geron has not been able to gain as much as its industry peers.

What does this mean?

Geron’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 difficult to forecast what will occur going forward, and when. The most useful step is to examine company-specific issues Geron may be facing and whether management guidance has regularly been met in the past. You should continue to research Geron to get a better picture of the stock by looking at:

  • 1. Future Outlook: What are well-informed industry analysts predicting for GERN’s future growth? Take a look at our free research report of analyst consensus for GERN’s outlook.

  • 2. Financial Health: Is GERN’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.

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