For investors, increase in profitability and industry-beating performance can be essential considerations in an investment. Below, I will examine Collagen Solutions plc’s (AIM:COS) track record on a high level, to give you some insight into how the company has been performing against its long term trend and its industry peers. Check out our latest analysis for Collagen Solutions
Was COS’s recent earnings decline worse than the long-term trend and the industry?
I look at the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This method allows me to assess different stocks on a more comparable basis, using new information. For Collagen Solutions, its most recent bottom-line (trailing twelve month) is -UK£2.03M, which compared to last year’s figure, has become more negative. Since these values are relatively nearsighted, I have computed an annualized five-year value for Collagen Solutions’s net income, which stands at -UK£1.55M. This doesn’t look much better, since earnings seem to have steadily been getting more and more negative over time.We can further examine Collagen Solutions’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Collagen Solutions’s top-line has increased by 53.70% on average, indicating that the company is in a high-growth period with expenses shooting ahead of revenues, leading to annual losses. Inspecting growth from a sector-level, the UK biotechs industry has been growing its average earnings by double-digit 41.13% over the previous twelve months, and 14.59% over the previous five years. This suggests that any tailwind the industry is enjoying, Collagen Solutions has not been able to realize the gains unlike 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 difficult to forecast what will happen in the future and when. The most insightful step is to examine company-specific issues Collagen Solutions may be facing and whether management guidance has consistently been met in the past. You should continue to research Collagen Solutions to get a more holistic view of the stock by looking at:
- 1. Future Outlook: What are well-informed industry analysts predicting for COS’s future growth? Take a look at our free research report of analyst consensus for COS’s outlook.
- 2. Financial Health: Is COS’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.
- 3. 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.