Investors with a long-term horizong may find it valuable to assess ViewRay Inc’s (NASDAQ:VRAY) earnings trend over time and against its industry benchmark as opposed to simply looking at a sincle earnings announcement at one point in time. Below is my commentary, albiet very simple and high-level, on how ViewRay is currently performing. Check out our latest analysis for ViewRay
Was VRAY’s weak performance lately a part of a long-term decline?
I use data from the most recent 12 months, 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 blend allows me to analyze many different companies in a uniform manner using the most relevant data points. For ViewRay, the latest twelve-month earnings -$58.5M, which, relative to the previous year’s level, has become more negative. Since these values may be relatively short-term thinking, I’ve estimated an annualized five-year value for ViewRay’s net income, which stands at -$44.4M. This doesn’t seem to paint a better picture, as earnings seem to have consistently been getting more and more negative over time.
Additionally, we can analyze ViewRay’s loss by researching what’s going on in the industry as well as within the company. Firstly, I want to quickly look into the line items. Revenue growth over the last few years has increased by 44.46%, signalling that ViewRay is in a high-growth phase with expenses racing ahead elevated top-line growth rates. Viewing growth from a sector-level, the US medical equipment industry has been growing its average earnings by double-digit 18.95% in the past twelve months, and a less exciting 9.07% over the past five. This suggests that whatever tailwind the industry is deriving benefit from, ViewRay has not been able to gain as much as its average peer.
What does this mean?
Though ViewRay’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 happen in the future and when. The most insightful step is to examine company-specific issues ViewRay may be facing and whether management guidance has dependably been met in the past. I recommend you continue to research ViewRay to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for VRAY’s future growth? Take a look at our free research report of analyst consensus for VRAY’s outlook.