In this commentary, I will examine Wanbury Limited’s (NSEI:WANBURY) latest earnings update (31 March 2017) and compare these figures against its performance over the past couple of years, as well as how the rest of the pharmaceuticals industry performed. As an investor, I find it beneficial to assess WANBURY’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. See our latest analysis for Wanbury
Did WANBURY beat its long-term earnings growth trend and its industry?
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 technique allows me to assess many different companies in a uniform manner using the most relevant data points. Wanbury’s most recent twelve-month earnings -₹50.5M, which, in comparison to the prior year’s level, has become less negative. Since these figures may be fairly myopic, I’ve computed an annualized five-year value for Wanbury’s earnings, which stands at -₹429.8M. This suggests that, although net income is negative, it has become less negative over the years.
We can further analyze Wanbury’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 the last couple of years has risen by a mere 2.18%. Given that top-line growth is also pretty stale the key to profitability in the future would be managing costs. Inspecting growth from a sector-level, the IN pharmaceuticals industry has been growing its average earnings by double-digit 11.44% in the previous twelve months, and 14.21% over the previous five years. This shows that, although Wanbury is presently unprofitable, it may have gained from industry tailwinds, moving earnings into a more favorable position.
What does this mean?
While past data is useful, it doesn’t tell the whole story. With companies that are currently loss-making, it is always hard to forecast what will occur going forward, and when. The most valuable step is to assess company-specific issues Wanbury may be facing and whether management guidance has regularly been met in the past. I recommend you continue to research Wanbury to get a better picture of the stock by looking at:
1. Financial Health: Is WANBURY’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.