Interested In ProPhase Labs Inc (NASDAQ:PRPH)? Here’s How It Performed Recently
After looking at ProPhase Labs Inc’s (NASDAQ:PRPH) latest earnings announcement (31 March 2018), I found it useful to revisit the company’s performance in the past couple of years and assess this against the most recent figures. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways. Check out our latest analysis for ProPhase Labs
Was PRPH’s recent earnings decline indicative of a tough track record?
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 technique allows me to examine different companies on a more comparable basis, using the most relevant data points. For ProPhase Labs, its most recent earnings (trailing twelve month) is -US$2.55M, which compared to last year’s level, has turned from positive to negative. Given that these values are fairly short-term, I have created an annualized five-year figure for ProPhase Labs’s net income, which stands at -US$465.25K. This doesn’t seem to paint a better picture, as earnings seem to have gradually been getting more and more negative over time.
We can further examine ProPhase Labs’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years ProPhase Labs has seen an annual decline in revenue of -7.86%, 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 pharmaceuticals industry has been growing its average earnings by double-digit 11.92% over the previous year, and a more subdued 9.59% over the past five. This means that any tailwind the industry is benefiting from, ProPhase Labs has not been able to realize the gains unlike its industry peers.
What does this mean?
Though ProPhase Labs’s past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always difficult to predict what will happen in the future and when. The most valuable step is to examine company-specific issues ProPhase Labs may be facing and whether management guidance has regularly been met in the past. You should continue to research ProPhase Labs to get a better picture of the stock by looking at:
Financial Health: Is PRPH’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 March 2018. 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.
