Today I will examine MYOS RENS Technology Inc’s (NASDAQ:MYOS) latest earnings update (31 March 2018) and compare these figures against its performance over the past couple of years, in addition to how the rest of MYOS’s industry performed. As a long-term investor, I find it useful to analyze the company’s trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time. Check out our latest analysis for MYOS RENS Technology
How Well Did MYOS Perform?MYOS is loss-making, with the most recent trailing twelve-month earnings of -US$4.15m (from 31 March 2018), which compared to last year has become less negative. However, the company’s loss seem to be contracting over the medium term, with the five-year earnings average of -US$4.42m. Each year, for the past five years MYOS has seen an annual decline in revenue of -11.42%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Looking at growth from a sector-level, the US personal products industry has been growing its average earnings by double-digit 15.93% over the prior year, and 11.60% over the past five years. This means whatever uplift the industry is deriving benefit from, MYOS RENS Technology has not been able to leverage it as much as its average peer.
Given that MYOS RENS Technology is not profitable, even if operating expenses (SG&A and one-year R&D) continues to fall at previous year’s rate of -10.88%, the company’s current cash level (US$230.00k) will still be insufficient to cover its expenses in the upcoming year. This is not a great sign in terms of operations and cash management. Although this is a relatively simplistic calculation, and MYOS RENS Technology may continue to reduce its costs further or open a new line of credit instead of issuing new equity shares, the outcome of this analysis still helps us understand how sustainable the MYOS RENS Technology’s operation is, and when things may have to change.
What does this mean?
Though MYOS RENS Technology’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always difficult to envisage what will happen in the future and when. The most useful step is to examine company-specific issues MYOS RENS Technology may be facing and whether management guidance has dependably been met in the past. I recommend you continue to research MYOS RENS Technology to get a better picture of the stock by looking at:
- Financial Health: Is MYOS’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.