Yahoo Finance Should ImpediMed Limited’s (ASX:IPD) Recent Earnings Worry You?
After looking at ImpediMed Limited’s (ASX:IPD) latest earnings announcement (30 June 2018), I found it useful to revisit the company’s performance in the past couple of years and assess this against the most recent figures. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether ImpediMed’s performance has been impacted by industry movements. In this article I briefly touch on my key findings.
Check out our latest analysis for ImpediMed
Want to help shape the future of investing tools and platforms? Take the survey and be part of one of the most advanced studies of stock market investors to date.
Did IPD’s recent performance beat its trend and industry?
IPD is loss-making, with the most recent trailing twelve-month earnings of -AU$27.2m (from 30 June 2018), which compared to last year has become less negative. Furthermore, the company’s loss seem to be growing over time, with the five-year earnings average of -AU$17.4m. Each year, for the past five years IPD has seen an annual increase in operating expense growth, outpacing revenue growth of 12%, on average. This adverse movement is a driver of the company’s inability to reach breakeven.
Looking at growth from a sector-level, the Australian medical equipment industry has been growing its average earnings by double-digit 13% over the prior year,
Since ImpediMed 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$31m in cash and short-term investments, however, opex (SG&A and one-year R&D) reached AU$33m in the latest twelve months. Although this is a relatively simplistic calculation, and ImpediMed may reduce its costs or open a new line of credit instead of issuing new equity shares, the analysis still helps us understand how sustainable the ImpediMed’s operation is, and when things may have to change.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that incur net loss is always difficult to predict what will happen in the future and when. The most valuable step is to assess company-specific issues ImpediMed may be facing and whether management guidance has regularly been met in the past. I recommend you continue to research ImpediMed to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for IPD’s future growth? Take a look at our free research report of analyst consensus for IPD’s outlook.
Financial Health: Are IPD’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 30 June 2018. This may not be consistent with full year annual report figures.
To help readers see past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
