Understanding Xenetic Biosciences Inc’s (NASDAQ:XBIO) performance as a company requires examining more than earnings from one point in time. Today I will take you through a basic sense check to gain perspective on how Xenetic Biosciences is doing by evaluating its latest earnings with its longer term trend as well as its industry peers’ performance over the same period. Check out our latest analysis for Xenetic Biosciences
Did XBIO beat its long-term earnings growth trend and its industry?
To account for any quarterly or half-yearly updates, I 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 enables me to analyze various companies on a similar basis, using the most relevant data points. For Xenetic Biosciences, its most recent trailing-twelve-month earnings is -US$2.55M, which, against last year’s figure, has become less negative. Since these figures may be relatively nearsighted, I’ve calculated an annualized five-year figure for Xenetic Biosciences’s net income, which stands at -US$15.70M. This means despite the fact that net income is negative, it has become less negative over the years.
We can further analyze Xenetic Biosciences’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Xenetic Biosciences’s top-line has risen by 40.15% on average, implying that the company is in a high-growth period with expenses racing ahead revenues, leading to annual losses. Looking at growth from a sector-level, the US biotechs industry has been growing its average earnings by double-digit 21.75% in the prior year, and 18.34% over the past half a decade. This means that, even though Xenetic Biosciences is presently loss-making, it may have benefited from industry tailwinds, moving earnings in the right direction.
What does this mean?
Xenetic Biosciences’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 happen in the future and when. The most useful step is to examine company-specific issues Xenetic Biosciences may be facing and whether management guidance has consistently been met in the past. I recommend you continue to research Xenetic Biosciences to get a better picture of the stock by looking at:
- Financial Health: Is XBIO’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.
- Valuation: What is XBIO worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether XBIO is currently mispriced by the market.
- 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.