When Cardiovascular Systems Inc (NASDAQ:CSII) announced its most recent earnings (30 September 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 Cardiovascular Systems 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 CSII has performed. Check out our latest analysis for Cardiovascular Systems
Were CSII’s earnings stronger than its past performances and the industry?
I like to use data from the most recent 12 months, 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 method allows me to examine many different companies on a similar basis, using the most relevant data points. For Cardiovascular Systems, its latest earnings (trailing twelve month) is -US$1.91M, which compared to the previous year’s figure, has become less negative. Since these values may be somewhat nearsighted, I have created an annualized five-year figure for Cardiovascular Systems’s earnings, which stands at -US$26.19M. This shows that, while net income is negative, it has become less negative over the years.
We can further analyze Cardiovascular Systems’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Cardiovascular Systems’s top-line has increased by 16.86% on average, signalling that the company is in a high-growth phase with expenses racing ahead revenues, leading to annual losses. Scanning growth from a sector-level, the US medical equipment industry has been growing its average earnings by double-digit 18.40% over the previous twelve months, and a less exciting 9.02% over the previous five years. This suggests that, though Cardiovascular Systems is currently loss-making, it may have been aided by industry tailwinds, moving earnings into a more favorable position.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that incur net loss is always difficult to envisage what will happen in the future and when. The most insightful step is to assess company-specific issues Cardiovascular Systems may be facing and whether management guidance has regularly been met in the past. You should continue to research Cardiovascular Systems to get a better picture of the stock by looking at:
- 1. Future Outlook: What are well-informed industry analysts predicting for CSII’s future growth? Take a look at our free research report of analyst consensus for CSII’s outlook.
- 2. Financial Health: Is CSII’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.
- 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 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.