Improvement in profitability and outperformance against the industry can be important characteristics in a stock for some investors. Below, I will assess Endologix Inc’s (NASDAQ:ELGX) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers. See our latest analysis for Endologix
Did ELGX beat its long-term earnings growth trend and its industry?
I look at 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 assess different companies on a more comparable basis, using new information. For Endologix, its most recent bottom-line (trailing twelve month) is -US$66.40M, which, against the previous year’s level, has become less negative. Given that these values may be relatively short-term, I have calculated an annualized five-year value for Endologix’s earnings, which stands at -US$52.66M. This shows that, Endologix has historically performed better than recently, even though it seems like earnings are now heading back towards a more favorable position once more.
We can further assess Endologix’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Endologix’s top-line has grown by 13.23% on average, signalling that the company is in a high-growth phase with expenses racing ahead revenues, leading to annual losses. Looking at growth from a sector-level, the US medical equipment industry has been growing its average earnings by double-digit 10.69% over the previous year, and 10.37% over the last five years. This means although Endologix is currently loss-making, it may have benefited from industry tailwinds, moving earnings into a more favorable position.
What does this mean?
Though Endologix’s past data is helpful, it is only one aspect of my investment thesis. 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 examine company-specific issues Endologix may be facing and whether management guidance has regularly been met in the past. I suggest you continue to research Endologix to get a better picture of the stock by looking at:
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1. Future Outlook: What are well-informed industry analysts predicting for ELGX’s future growth? Take a look at our free research report of analyst consensus for ELGX’s outlook.
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2. Financial Health: Is ELGX’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.
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3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2017. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.