After looking at Milestone Medical Inc’s (WSE:MMD) latest earnings announcement (30 September 2017), I found it useful to revisit the company’s performance in the past couple of years and assess this against the most recent figures. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether Milestone Medical’s performance has been impacted by industry movements. In this article I briefly touch on my key findings. Check out our latest analysis for Milestone Medical
How Did MMD’s Recent Performance Stack Up Against Its Past?
I prefer to use 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 technique enables me to examine different companies in a uniform manner using the most relevant data points. For Milestone Medical, its latest earnings (trailing twelve month) is -US$2.47M, which compared to last year’s level, has become less negative. Since these values may be fairly short-term, I’ve created an annualized five-year figure for MMD’s earnings, which stands at -US$2.66M. This means that, despite the fact that net income is negative, it has become less negative over the years.
We can further evaluate Milestone Medical’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Milestone Medical has seen an annual decline in revenue of -37.19%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Viewing growth from a sector-level, the PL medical equipment industry has been enduring severe headwinds over the prior twelve months, leading to average earnings dropping by more than half. This is a a notable change, given that the industry has been delivering a relatively flat growth rate over the previous few years. This means that despite the fact that Milestone Medical is currently loss-making, whatever near-term headwind the industry is experiencing, the impact on Milestone Medical has been softer relative to its peers.
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 assess company-specific issues Milestone Medical may be facing and whether management guidance has dependably been met in the past. I suggest you continue to research Milestone Medical to get a better picture of the stock by looking at:
- 1. Financial Health: Is MMD’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. 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.