After reading Dimerix Limited’s (ASX:DXB) most recent earnings announcement (31 December 2017), 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 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 Dimerix’s performance has been impacted by industry movements. In this article I briefly touch on my key findings. Check out our latest analysis for Dimerix
How Did DXB’s Recent Performance Stack Up Against Its Past?
I prefer to use data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This enables me to analyze various companies on a similar basis, using the most relevant data points. For Dimerix, its latest earnings (trailing twelve month) is -AU$2.50M, which, relative to the prior year’s level, has become more negative. Given that these values may be relatively short-term, I’ve determined an annualized five-year value for Dimerix’s earnings, which stands at -AU$2.31M. This doesn’t seem to paint a better picture, since earnings seem to have gradually been getting more and more negative over time.We can further examine Dimerix’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Dimerix’s top-line has grown by 13.47% on average, indicating that the company is in a high-growth phase with expenses shooting ahead of 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 past year, and 34.09% over the past five years. This means whatever uplift the industry is benefiting from, Dimerix has not been able to leverage it as much as its industry peers.
What does this mean?
Dimerix’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that incur net loss is always hard to forecast what will happen in the future and when. The most useful step is to examine company-specific issues Dimerix may be facing and whether management guidance has dependably been met in the past. I recommend you continue to research Dimerix to get a more holistic view of the stock by looking at:
- Financial Health: Is DXB’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.