When iBio Inc (AMEX:IBIO) 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 iBio 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 IBIO has performed. See our latest analysis for IBIO
Was IBIO’s recent earnings decline worse than the long-term trend and the industry?
For the most up-to-date info, 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 allows me to examine different companies in a uniform manner using new information. For iBio, the latest earnings -$15.5M, which, relative to the prior year’s figure, has become more negative. Since these figures are somewhat short-term thinking, I have created an annualized five-year figure for iBio’s net income, which stands at -$8.2M. This doesn’t seem to paint a better picture, as earnings seem to have steadily been getting more and more negative over time.
We can further evaluate iBio’s loss by researching what has been happening in the industry as well as within the company. Initially, I want to briefly look into the line items. Revenue growth over past few years has been fairly muted, remaining flat on average at -0.72%. Given that top-line growth is also pretty flat, the key to profitability moving forward would be controlling cost growth rates. Looking at growth from a sector-level, the US biotechnology industry has been growing its average earnings by double-digit 11.07% in the previous year, and 20.18% over the previous five years. This shows that whatever tailwind the industry is deriving benefit from, iBio has not been able to realize the gains unlike its average peer.
What does this mean?
Though iBio’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 happen in the future and when. The most insightful step is to assess company-specific issues iBio may be facing and whether management guidance has regularly been met in the past. I recommend you continue to research iBio to get a more holistic view of the stock by looking at:
1. Financial Health: Is IBIO’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.
2. 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 last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. 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.