Today I will take a look at Athenex Inc’s (NASDAQ:ATNX) most recent earnings update (30 September 2017) and compare these latest figures against its performance over the past few years, as well as how the rest of the biotechnology industry performed. As an investor, I find it beneficial to assess ATNX’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time. View our latest analysis for Athenex
Was ATNX’s weak performance lately a part of a long-term decline?
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 blend enables me to analyze different companies on a more comparable basis, using new information. For Athenex, its most recent bottom-line is -$142.9M, which, relative to the prior year’s figure, has become more negative. Since these values may be relatively short-term, I’ve estimated an annualized five-year figure for Athenex’s earnings, which stands at -$89.0M. This doesn’t seem to paint a better picture, since earnings seem to have gradually been getting more and more negative over time.
We can further analyze Athenex’s loss by researching what has been happening in the industry as well as within the company. First, I want to briefly look into the line items. Revenue growth over the last few years has increased by 46.94%, indicating that Athenex is in a high-growth period with expenses racing ahead high top-line growth rates, leading to yearly losses. Eyeballing growth from a sector-level, the US biotechnology industry has been growing its average earnings by double-digit 11.07% over the past twelve months, and 20.18% over the past couple of years. This means that any tailwind the industry is enjoying, Athenex has not been able to leverage it as much as its industry peers.
What does this mean?
Athenex’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. With companies that are currently loss-making, it is always difficult to predict what will happen in the future and when. The most valuable step is to assess company-specific issues Athenex may be facing and whether management guidance has consistently been met in the past. I suggest you continue to research Athenex to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for ATNX’s future growth? Take a look at our free research report of analyst consensus for ATNX’s outlook.