Measuring Midatech Pharma Plc’s (AIM:MTPH) track record of past performance is a useful exercise for investors. It enables us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess MTPH’s recent performance announced on 30 June 2017 and weigh these figures against its long-term trend and industry movements. Check out our latest analysis for Midatech Pharma
Was MTPH weak performance lately part of a long-term decline?
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 analyze different stocks on a similar basis, using the latest information. Midatech Pharma’s latest twelve-month earnings -£21M, which, in comparison to the previous year’s level, has become more negative. Given that these values may be somewhat nearsighted, I’ve computed an annualized five-year value for MTPH’s earnings, which stands at -£11M. 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 assess Midatech Pharma’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 past few years has grew by 94.54%, implying that Midatech Pharma is in a high-growth period with expenses racing ahead elevated top-line growth rates. Scanning growth from a sector-level, the UK biotechnology industry has been growing its average earnings by double-digit 25.80% in the past year, and a more subdued 7.44% over the previous few years. This suggests that whatever tailwind the industry is benefiting from, Midatech Pharma has not been able to reap as much as its average peer.
What does this mean?
Though Midatech Pharma’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always hard to envisage what will happen in the future and when. The most valuable step is to examine company-specific issues Midatech Pharma may be facing and whether management guidance has dependably been met in the past. You should continue to research Midatech Pharma to get a more holistic view of the stock by looking at:
1. Financial Health: Is MTPH’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.
2. 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 last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.