After looking at HTG Molecular Diagnostics Inc’s (NASDAQ:HTGM) latest earnings announcement (31 December 2017), 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 tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways. See our latest analysis for HTG Molecular Diagnostics
Did HTGM’s recent earnings growth beat the long-term trend and the industry?
I like to use data from the most recent 12 months, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This enables me to examine different companies on a similar basis, using the latest information. For HTG Molecular Diagnostics, its most recent bottom-line (trailing twelve month) is -US$18.96M, which, against last year’s level, has become less negative. Since these figures may be fairly nearsighted, I’ve estimated an annualized five-year value for HTG Molecular Diagnostics’s net income, which stands at -US$20.44M. This means while net income is negative, it has become less negative over the years.We can further analyze HTG Molecular Diagnostics’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years HTG Molecular Diagnostics’s top-line has grown by 33.70% on average, signalling that the company is in a high-growth period with expenses racing ahead revenues, leading to annual losses. Looking at growth from a sector-level, the US healthcare services industry has been growing its average earnings by double-digit 27.90% over the past twelve months, and 19.46% over the past five. This means whatever uplift the industry is deriving benefit from, HTG Molecular Diagnostics has not been able to leverage it as much as its average peer.
What does this mean?
Though HTG Molecular Diagnostics’s past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always difficult to envisage what will occur going forward, and when. The most insightful step is to assess company-specific issues HTG Molecular Diagnostics may be facing and whether management guidance has regularly been met in the past. I recommend you continue to research HTG Molecular Diagnostics to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for HTGM’s future growth? Take a look at our free research report of analyst consensus for HTGM’s outlook.
- Financial Health: Is HTGM’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.