For long-term investors, assessing earnings trend over time and against industry benchmarks is more beneficial than examining a single earnings announcement at a point in time. Investors may find my commentary, albeit very high-level and brief, on Invitrocue Limited (ASX:IVQ) useful as an attempt to give more color around how Invitrocue is currently performing. Check out our latest analysis for Invitrocue
Could IVQ beat the long-term trend and outperform its industry?
I look at data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This enables me to assess various companies in a uniform manner using the latest information. Invitrocue’s most recent twelve-month earnings -SGD1.8M, which, in comparison to the previous year’s level, has become less negative. Given that these values are relatively myopic, I’ve created an annualized five-year value for IVQ’s earnings, which stands at -SGD17.7M. This means that, while net income is negative, it has become less negative over the years.
Additionally, we can assess Invitrocue’s loss by looking at what’s going on in the industry on top of within the company. First, I want to quickly look into the line items. Revenue growth over last couple of years has grew by 47.00%, signalling that Invitrocue is in a high-growth period with expenses racing ahead elevated top-line growth rates. Looking at growth from a sector-level, the Australian biotechnology industry has been growing, albeit, at a subdued single-digit rate of 9.22% over the past twelve months, and a substantial 31.57% over the past couple of years. This means although Invitrocue is presently loss-making, it may have been aided by industry tailwinds, moving earnings into a more favorable position.
What does this mean?
Invitrocue’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 envisage what will happen in the future and when. The most insightful step is to assess company-specific issues Invitrocue may be facing and whether management guidance has steadily been met in the past. I suggest you continue to research Invitrocue to get a better picture of the stock by looking at:
1. Financial Health: Is IVQ’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.