Yahoo Finance How Has Adherium Limited’s (ASX:ADR) Performed Against The Industry?
After reading Adherium Limited’s (ASX:ADR) most recent earnings announcement (31 December 2018), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways.
Check out our latest analysis for Adherium
Have ADR’s earnings improved against past performances and the industry?
ADR is loss-making, with the most recent trailing twelve-month earnings of -AU$13.0m (from 31 December 2018), which compared to last year has become more negative. Furthermore, the company’s loss seem to be growing over time, with the five-year earnings average of -AU$7.5m. Each year, for the past five years ADR has seen an annual increase in operating expense growth, outpacing revenue growth of 26%, on average. This adverse movement is a driver of the company’s inability to reach breakeven.
Scanning growth from a sector-level, the Australian healthcare services industry has been growing its average earnings by double-digit 20% in the previous twelve months,
Since Adherium is loss-making, with operating expenses (opex) growing year-on-year at 25%, it may need to raise more cash over the next year. It currently has AU$4.1m in cash and short-term investments, however, opex (SG&A and one-year R&D) reached AU$17m in the latest twelve months. Although this is a relatively simplistic calculation, and Adherium may reduce its costs or raise debt capital instead of coming to equity markets, the analysis still gives us an idea of the company’s timeline and when things will have to start changing, since its current operation is unsustainable.
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 envisage what will happen in the future and when. The most useful step is to examine company-specific issues Adherium may be facing and whether management guidance has dependably been met in the past. You should continue to research Adherium to get a better picture of the stock by looking at:
Financial Health: Are ADR’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.
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 2018. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
