For investors with a long-term horizon, assessing earnings trend over time and against industry benchmarks is more valuable than looking at a single earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on Adverum Biotechnologies Inc (NASDAQ:ADVM) useful as an attempt to give more color around how Adverum Biotechnologies is currently performing. See our latest analysis for Adverum Biotechnologies
Did ADVM beat its long-term earnings growth trend and its industry?
I look at 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 method allows me to assess different stocks on a similar basis, using the most relevant data points. For Adverum Biotechnologies, the most recent twelve-month earnings -$63.8M, which compared to the previous year’s level, has become less negative. Given that these figures are relatively short-term, I’ve computed an annualized five-year value for Adverum Biotechnologies’s net income, which stands at -$50.9M. This means that, Adverum Biotechnologies has historically performed better than recently, though it seems like earnings are now heading back in the right direction again.
We can further examine Adverum Biotechnologies’s loss by looking at what’s going on in the industry on top of within the company. Firstly, I want to briefly look into the line items. Revenue growth over the past couple of years has risen by 41.64%, implying that Adverum Biotechnologies is in a high-growth period with expenses shooting ahead of high top-line growth rates. Inspecting growth from a sector-level, the US biotechnology industry has been growing its average earnings by double-digit 11.07% over the past year, and 20.18% over the previous five years. This suggests that, even though Adverum Biotechnologies is presently unprofitable, it may have been aided by industry tailwinds, moving earnings towards to right direction.
What does this mean?
Though Adverum Biotechnologies’s past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always hard to predict what will occur going forward, and when. The most valuable step is to assess company-specific issues Adverum Biotechnologies may be facing and whether management guidance has consistently been met in the past. I suggest you continue to research Adverum Biotechnologies to get a better picture of the stock by looking at: