When Impax Laboratories Inc (NASDAQ:IPXL) announced its most recent earnings (30 September 2017), I did two things: looked at its past earnings track record, then look at what is happening in the industry. Understanding how Impax Laboratories 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 IPXL has performed. See our latest analysis for Impax Laboratories
Commentary On IPXL’s Past Performance
For the purpose of this commentary, I like to use the ‘latest twelve-month’ data, 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 analyze different companies on a similar basis, using new information. For Impax Laboratories, the most recent earnings -$447.8M, which, in comparison to the previous year’s figure, has become more negative. Given that these values are relatively short-term thinking, I’ve created an annualized five-year value for Impax Laboratories’s net income, which stands at -$18.9M. This doesn’t seem to paint a better picture, since earnings seem to have steadily been getting more and more negative over time.
Additionally, we can analyze Impax Laboratories’s loss by looking at what has been happening in the industry on top of within the company. Firstly, I want to briefly look into the line items. Revenue growth over the last few years has risen by a mere 6.22%. Given that top-line growth is also pretty stale the key to profitability moving forward would be controlling cost growth rates. Eyeballing growth from a sector-level, the US pharmaceuticals industry has been growing, albeit, at a muted single-digit rate of 6.66% over the past twelve months, and a substantial 11.75% over the past five years. This means any uplift the industry is deriving benefit from, Impax Laboratories has not been able to realize the gains unlike its industry peers.
What does this mean?
Though Impax Laboratories’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always hard to forecast what will occur going forward, and when. The most insightful step is to assess company-specific issues Impax Laboratories may be facing and whether management guidance has dependably been met in the past. You should continue to research Impax Laboratories to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for IPXL’s future growth? Take a look at our free research report of analyst consensus for IPXL’s outlook.
2. Financial Health: Is IPXL’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 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.