In this article, I will take a look at Sarepta Therapeutics Inc’s (NASDAQ:SRPT) most recent earnings update (31 March 2018) and compare these latest figures against its performance over the past few years, along with how the rest of SRPT’s industry performed. As a long-term investor, I find it useful to analyze the company’s trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time. Check out our latest analysis for Sarepta Therapeutics
Was SRPT’s recent earnings decline worse than the long-term trend and the industry?
I look at 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 allows me to assess different stocks on a similar basis, using the most relevant data points. For Sarepta Therapeutics, its latest trailing-twelve-month earnings is -US$170.14M, which compared to last year’s level, has become more negative. Since these figures may be relatively short-term, I’ve determined an annualized five-year figure for Sarepta Therapeutics’s net income, which stands at -US$128.62M. This doesn’t look much better, as earnings seem to have gradually been getting more and more negative over time.
We can further analyze Sarepta Therapeutics’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Sarepta Therapeutics’s top-line has increased by 17.43% on average, indicating that the company is in a high-growth phase with expenses racing ahead revenues, leading to annual losses. Inspecting growth from a sector-level, the US biotechs industry has been growing its average earnings by double-digit 21.75% over the previous year, and 18.46% over the last five years. This suggests that whatever tailwind the industry is enjoying, Sarepta Therapeutics has not been able to gain as much as its average peer.
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 envisage what will occur going forward, and when. The most useful step is to assess company-specific issues Sarepta Therapeutics may be facing and whether management guidance has dependably been met in the past. I recommend you continue to research Sarepta Therapeutics to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for SRPT’s future growth? Take a look at our free research report of analyst consensus for SRPT’s outlook.
- Financial Health: Is SRPT’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.