In this commentary, I will examine Pulmatrix Inc’s (NASDAQ:PULM) latest earnings update (31 March 2018) and compare these figures against its performance over the past couple of years, as well as how the rest of the pharmaceuticals industry performed. As an investor, I find it beneficial to assess PULM’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time. View our latest analysis for Pulmatrix
Were PULM’s earnings stronger than its past performances and the industry?
I prefer to 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 examine many different companies in a uniform manner using new information. For Pulmatrix, its latest earnings (trailing twelve month) is -US$19.79M, which compared to the prior year’s figure, has become less negative. Since these figures are somewhat short-term, I have calculated an annualized five-year figure for Pulmatrix’s net income, which stands at -US$18.90M. This means that, Pulmatrix has historically performed better than recently, while it seems like earnings are now heading back towards a more favorable position once more.
We can further evaluate Pulmatrix’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Pulmatrix has seen an annual decline in revenue of -10.17%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Looking at growth from a sector-level, the US pharmaceuticals industry has been growing its average earnings by double-digit 11.92% in the prior twelve months, and a more muted 9.59% over the last five years. This means that, though Pulmatrix is currently loss-making, it may have gained from industry tailwinds, moving earnings into a more favorable position.
What does this mean?
While past data is useful, it doesn’t tell the whole story. With companies that are currently loss-making, it is always hard to forecast what will happen in the future and when. The most insightful step is to assess company-specific issues Pulmatrix may be facing and whether management guidance has steadily been met in the past. You should continue to research Pulmatrix to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for PULM’s future growth? Take a look at our free research report of analyst consensus for PULM’s outlook.
- Financial Health: Is PULM’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.