Want To Invest In DURECT Corporation (NASDAQ:DRRX)? Here’s How It Performed Lately
For investors, increase in profitability and industry-beating performance can be essential considerations in an investment. Below, I will examine DURECT Corporation’s (NASDAQ:DRRX) 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. Check out our latest analysis for DURECT
Did DRRX beat its long-term earnings growth trend and its industry?
I look at 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 allows me to analyze various companies in a uniform manner using the latest information. For DURECT, its most recent trailing-twelve-month earnings is -US$3.88M, which compared to last year’s level, has become less negative. Since these figures may be relatively short-term thinking, I’ve calculated an annualized five-year value for DRRX’s net income, which stands at -US$16.71M. This means that, although net income is negative, it has become less negative over the years.
We can further evaluate DURECT’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade DURECT has seen an annual decline in revenue of -13.78%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Inspecting growth from a sector-level, the US pharmaceuticals industry has been growing its average earnings by double-digit 11.73% over the previous year, and a more subdued 9.56% over the last five years. This means though DURECT is presently running a loss, it may have been aided by industry tailwinds, moving earnings in the right direction.
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 happen in the future and when. The most useful step is to examine company-specific issues DURECT may be facing and whether management guidance has dependably been met in the past. I suggest you continue to research DURECT to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for DRRX’s future growth? Take a look at our free research report of analyst consensus for DRRX’s outlook.
Financial Health: Is DRRX’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.
