Yahoo Finance Botanix Pharmaceuticals Limited (ASX:BOT): Does The Earnings Decline Make It An Underperformer?
Today I will examine Botanix Pharmaceuticals Limited’s (ASX:BOT) latest earnings update (31 December 2017) and compare these figures against its performance over the past couple of years, in addition to how the rest of BOT’s industry performed. As a long-term investor, I find it useful to analyze the company’s trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time. View our latest analysis for Botanix Pharmaceuticals
Was BOT’s weak performance lately a part of a long-term decline?
For the most up-to-date info, I use the ‘latest twelve-month’ data, 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 method allows me to examine various companies on a similar basis, using new information. For Botanix Pharmaceuticals, its most recent trailing-twelve-month earnings is -AU$5.91M, which, in comparison to the previous year’s figure, has become more negative. Since these values may be fairly nearsighted, I’ve determined an annualized five-year value for BOT’s earnings, which stands at -AU$4.16M. This doesn’t seem to paint a better picture, as earnings seem to have consistently been getting more and more negative over time.
We can further examine Botanix Pharmaceuticals’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Botanix Pharmaceuticals’s top-line more than doubled on average, signalling that the business is in a high-growth period with expenses racing ahead revenues, leading to annual losses. Viewing growth from a sector-level, the Australian biotechs industry has been growing its average earnings by double-digit 21.75% in the previous year, and 34.09% over the past five. This suggests that whatever tailwind the industry is profiting from, Botanix Pharmaceuticals has not been able to leverage it as much as its average peer.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that incur net loss is always hard to predict what will occur going forward, and when. The most insightful step is to examine company-specific issues Botanix Pharmaceuticals may be facing and whether management guidance has steadily been met in the past. I recommend you continue to research Botanix Pharmaceuticals to get a better picture of the stock by looking at:
Financial Health: Is BOT’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 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.
