Onconova Therapeutics Inc (NASDAQ:ONTX): Does The Earnings Decline Make It An Underperformer?
Increase in profitability and industry-beating performance can be essential considerations in a stock for some investors. In this article, I will take a look at Onconova Therapeutics Inc’s (NASDAQ:ONTX) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers. Check out our latest analysis for Onconova Therapeutics
Was ONTX’s recent earnings decline indicative of a tough track record?
I use the ‘latest twelve-month’ data, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This technique enables me to examine various companies on a similar basis, using the latest information. For Onconova Therapeutics, its most recent earnings (trailing twelve month) is -US$24.09M, which, against the prior year’s level, has become more negative. Given that these figures may be fairly nearsighted, I’ve calculated an annualized five-year figure for ONTX’s net income, which stands at -US$39.13M. This suggests that, while net income is negative, it has become less negative over the years.
We can further analyze Onconova Therapeutics’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Onconova Therapeutics has seen an annual decline in revenue of -37.41%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Eyeballing growth from a sector-level, the US biotechs industry has been growing its average earnings by double-digit 21.75% over the past twelve months, and 19.47% over the last five years. This means any uplift the industry is profiting from, Onconova Therapeutics has not been able to leverage it as much as its average peer.
What does this mean?
Though Onconova Therapeutics’s past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always hard to predict what will occur going forward, and when. The most useful step is to assess company-specific issues Onconova Therapeutics may be facing and whether management guidance has steadily been met in the past. I suggest you continue to research Onconova Therapeutics to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for ONTX’s future growth? Take a look at our free research report of analyst consensus for ONTX’s outlook.
Financial Health: Is ONTX’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 December 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.
