Examining Invion Limited’s (ASX:IVX) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess IVX’s latest performance announced on 30 June 2017 and compare these figures to its longer term trend and industry movements. Check out our latest analysis for Invion
How IVX fared against its long-term earnings performance and its industry
I prefer to use the ‘latest twelve-month’ data, 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 technique enables me to assess many different companies on a similar basis, using new information. For Invion, the most recent twelve-month earnings -A$2.2M, which compared to the prior year’s figure, has become less negative. Since these figures may be relatively short-term, I have estimated an annualized five-year value for Invion’s earnings, which stands at -A$7.4M. This suggests that, though net income is negative, it has become less negative over the years.
We can further examine Invion’s loss by looking at what’s going on in the industry as well as within the company. First, I want to briefly look into the line items. Revenue growth over the last couple of years has been negative at -2.35%. The key to profitability here is to make sure the company’s cost growth is well-controlled. Viewing growth from a sector-level, the Australian pharmaceuticals industry has been growing its average earnings by double-digit 10.76% in the past year, and 10.67% over the previous five years. This means that, even though Invion is presently running a loss, it may have been aided by industry tailwinds, moving earnings in the right direction.
What does this mean?
Though Invion’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 envisage what will occur going forward, and when. The most insightful step is to examine company-specific issues Invion may be facing and whether management guidance has dependably been met in the past. I suggest you continue to research Invion to get a better picture of the stock by looking at:
1. Financial Health: Is IVX’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.