Where NanoVibronix Inc (NAOV) Stands In Terms Of Earnings Growth Against Its Industry
In this article, I will take a look at NanoVibronix Inc’s (NASDAQ:NAOV) most recent earnings update (30 September 2017) and compare these latest figures against its performance over the past few years, along with how the rest of NAOV’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. See our latest analysis for NAOV
Did NAOV perform worse than its track record and industry?
I like to use the ‘latest twelve-month’ data, 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 method enables me to analyze different companies in a uniform manner using the latest information. For NanoVibronix, the most recent earnings -$4.4M, which, relative to the prior year’s figure, has become more negative. Given that these values are fairly myopic, I’ve created an annualized five-year value for NanoVibronix’s net income, which stands at -$2.5M. This doesn’t look much better, as earnings seem to have consistently been getting more and more negative over time.
We can further evaluate NanoVibronix’s loss by researching what’s going on in the industry along with within the company. Firstly, I want to quickly look into the line items. Revenue growth over past couple of years has grown by a mere 4.08%. Given that top-line growth is also pretty flat, the key to profitability going forward would be managing cost growth rates. Viewing growth from a sector-level, the US medical equipment industry has been growing its average earnings by double-digit 18.95% over the past year, and a more subdued 9.07% over the past couple of years. This shows that any tailwind the industry is deriving benefit from, NanoVibronix has not been able to leverage it as much as its industry peers.
What does this mean?
Though NanoVibronix’s past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always difficult to forecast what will occur going forward, and when. The most useful step is to examine company-specific issues NanoVibronix may be facing and whether management guidance has consistently been met in the past. I suggest you continue to research NanoVibronix to get a more holistic view of the stock by looking at:
1. Financial Health: Is NAOV’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 last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. 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.
