Today I will examine Applied Genetic Technologies Corporation’s (NASDAQ:AGTC) latest earnings update (30 September 2017) and compare these figures against its performance over the past couple of years, in addition to how the rest of AGTC’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 Applied Genetic Technologies
Was AGTC weak performance lately part of a long-term decline?
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 method enables me to assess different stocks in a uniform manner using the latest information. For Applied Genetic Technologies, its latest trailing-twelve-month earnings is -$4.0M, which, in comparison to the previous year’s figure, has turned from positive to negative. Given that these values are relatively short-term thinking, I’ve determined an annualized five-year value for AGTC’s earnings, which stands at -$9.1M. This shows that, though net income is negative, it has become less negative over the years.We can further examine Applied Genetic Technologies’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Applied Genetic Technologies’s top-line has risen by 63.14% on average, implying that the company is in a high-growth phase with expenses shooting ahead of revenues, leading to annual losses. Looking at growth from a sector-level, the US biotechs industry has been growing its average earnings by double-digit 12.33% over the prior year, and 19.86% over the previous five years. This suggests that whatever uplift the industry is deriving benefit from, Applied Genetic Technologies has not been able to leverage it as much as its average peer.
What does this mean?
Though Applied Genetic Technologies’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always hard to predict what will occur going forward, and when. The most insightful step is to assess company-specific issues Applied Genetic Technologies may be facing and whether management guidance has regularly been met in the past. I recommend you continue to research Applied Genetic Technologies to get a better picture of the stock by looking at:
- 1. Future Outlook: What are well-informed industry analysts predicting for AGTC’s future growth? Take a look at our free research report of analyst consensus for AGTC’s outlook.
- 2. Financial Health: Is AGTC’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.