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 Oncobiologics Inc (NASDAQ:ONS) useful as an attempt to give more color around how Oncobiologics is currently performing. Check out our latest analysis for Oncobiologics
How Well Did ONS Perform?
For the purpose of this commentary, I like to use data from the most recent 12 months, 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 allows me to analyze many different companies on a similar basis, using the latest information. For Oncobiologics, the latest earnings -$43.1M, which, in comparison to the prior year’s figure, has become less negative. Given that these values are relatively short-term, I have estimated an annualized five-year value for Oncobiologics’s earnings, which stands at -$55.5M. This means that, although net income is negative, it has become less negative over the years.
We can further analyze Oncobiologics’s loss by looking at what has been happening in the industry as well as within the company. First, I want to quickly look into the line items. Revenue growth over past few years has been negative at -72.71%. The key to profitability here is to make sure the company’s cost growth is well-managed. Eyeballing growth from a sector-level, the US biotechnology industry has been growing its average earnings by double-digit 12.32% over the previous year, and 20.04% over the past couple of years. This suggests that, even though Oncobiologics is currently running a loss, it may have benefited from industry tailwinds, moving earnings towards to right direction.
What does this mean?
Though Oncobiologics’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 happen in the future and when. The most insightful step is to assess company-specific issues Oncobiologics may be facing and whether management guidance has consistently been met in the past. You should continue to research Oncobiologics to get a better picture of the stock by looking at:
1. Financial Health: Is ONS’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.