Does NanoVibronix Inc's (NASDAQ:NAOV) -78.3% EPS Decline Reflect A Long-Term Trend?

After reading NanoVibronix Inc's (NASDAQ:NAOV) most recent earnings announcement (30 September 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 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. View our latest analysis for NanoVibronix

Commentary On NAOV's Past Performance

I like to use data from the most recent 12 months, 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 blend enables me to assess different stocks on a similar basis, using the latest information. NanoVibronix's most recent earnings -$4.4M, which compared to the previous year's level, has become more negative. Since these values may be fairly nearsighted, I have created an annualized five-year figure for NAOV's net income, which stands at -$2.5M. This doesn't look much better, since earnings seem to have consistently been getting more and more negative over time.

We can further assess NanoVibronix's loss by looking at what has been happening in the industry on top of within the company. First, I want to briefly look into the line items. Revenue growth over the past few years has risen by a mere 4.08%. Since top-line growth is also pretty stale the key to profitability going forward would be controlling cost growth rates. Eyeballing growth from a sector-level, the US medical equipment industry has been growing its average earnings by double-digit 18.95% over the prior year, and a less exciting 9.07% over the previous few years. This means whatever uplift the industry is enjoying, NanoVibronix has not been able to realize the gains unlike its industry peers.

What does this mean?

NanoVibronix's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. With companies that are currently loss-making, it is always hard to forecast what will happen in the future and when. The most insightful step is to examine company-specific issues NanoVibronix may be facing and whether management guidance has dependably been met in the past. I recommend you continue to research NanoVibronix to get a more holistic view of the stock by looking at:

1. Financial Health: Is NAOV’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.

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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.