When Fonar Corporation (NASDAQ:FONR) announced its most recent earnings (31 December 2017), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well Fonar has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I’ve summarized the key takeaways on how I see FONR has performed. See our latest analysis for Fonar
Commentary On FONR’s Past Performance
I prefer to use 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 more comparable basis, using new information. For Fonar, its most recent bottom-line (trailing twelve month) is US$18.80M, which, relative to last year’s figure, has climbed up by 14.96%. Since these values may be relatively short-term, I have computed an annualized five-year figure for FONR’s net income, which stands at US$10.78M This means that, on average, Fonar has been able to consistently improve its profits over the last few years as well.
What’s enabled this growth? Well, let’s take a look at if it is merely attributable to an industry uplift, or if Fonar has experienced some company-specific growth. In the last couple of years, Fonar expanded its bottom line faster than revenue by efficiently controlling its costs. This resulted in a margin expansion and profitability over time. Inspecting growth from a sector-level, the US medical equipment industry has been growing its average earnings by double-digit 11.06% in the past year, and 10.37% over the past half a decade. This shows that any tailwind the industry is gaining from, Fonar is capable of leveraging this to its advantage.
What does this mean?
Though Fonar’s past data is helpful, it is only one aspect of my investment thesis. While Fonar has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I recommend you continue to research Fonar to get a more holistic view of the stock by looking at:
- 1. Financial Health: Is FONR’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.
- 2. Valuation: What is FONR 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 FONR is currently mispriced by the market.
- 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 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.