Ironwood Pharmaceuticals Inc’s (NASDAQ:IRWD) Earnings Dropped -73.31%, Did Its Industry Show Weakness Too?
For investors, increase in profitability and industry-beating performance can be essential considerations in an investment. Below, I will examine Ironwood Pharmaceuticals Inc’s (NASDAQ:IRWD) track record on a high level, to give you some insight into how the company has been performing against its long term trend and its industry peers. See our latest analysis for Ironwood Pharmaceuticals
Was IRWD’s recent earnings decline indicative of a tough track record?
I look at the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This allows me to examine many different companies on a more comparable basis, using the most relevant data points. For Ironwood Pharmaceuticals, its latest trailing-twelve-month earnings is -US$142.53M, which, against the previous year’s level, has become more negative. Given that these figures are relatively myopic, I have estimated an annualized five-year figure for IRWD’s net income, which stands at -US$135.32M. This doesn’t seem to paint a better picture, as earnings seem to have consistently been getting more and more negative over time.
We can further evaluate Ironwood Pharmaceuticals’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Ironwood Pharmaceuticals’s top-line has risen by 25.72% on average, implying that the company is in a high-growth period with expenses shooting ahead of revenues, leading to annual losses. Viewing growth from a sector-level, the US biotechs industry has been growing its average earnings by double-digit 13.11% in the prior twelve months, and 19.44% over the last five years. This means whatever uplift the industry is benefiting from, Ironwood Pharmaceuticals has not been able to gain as much as its industry peers.
What does this mean?
Ironwood Pharmaceuticals’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that incur net loss is always difficult to predict what will happen in the future and when. The most valuable step is to examine company-specific issues Ironwood Pharmaceuticals may be facing and whether management guidance has steadily been met in the past. You should continue to research Ironwood Pharmaceuticals to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for IRWD’s future growth? Take a look at our free research report of analyst consensus for IRWD’s outlook.
2. Financial Health: Is IRWD’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 trailing twelve months from 30 September 2017. 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.
