Should Clearside BioMedical Inc's (NASDAQ:CLSD) Recent Earnings Decline Worry You?

Examining Clearside BioMedical Inc's (NASDAQ:CLSD) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess CLSD's latest performance announced on 30 September 2017 and compare these figures to its longer term trend and industry movements. View our latest analysis for Clearside BioMedical

Despite a decline, did CLSD underperform the long-term trend and the industry?

I use the ‘latest twelve-month’ data, 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 technique allows me to assess different stocks in a uniform manner using new information. For Clearside BioMedical, its most recent earnings (trailing twelve month) is -US$52.17M, which, against the prior year's figure, has become more negative. Since these figures may be relatively short-term, I have created an annualized five-year value for CLSD's net income, which stands at -US$18.52M. This doesn’t seem to paint a better picture, as earnings seem to have consistently been getting more and more negative over time.

We can further assess Clearside BioMedical's loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Clearside BioMedical has seen an annual decline in revenue of -73.78%, on average. This adverse movement is a driver of the company's inability to reach breakeven. Has the entire industry experienced this headwind? Eyeballing growth from a sector-level, the US pharmaceuticals industry has been growing its average earnings by double-digit 10.54% in the previous twelve months, and a more subdued 9.75% over the previous five years. This suggests that any uplift the industry is deriving benefit from, Clearside BioMedical has not been able to leverage it as much as its average peer.

What does this mean?

Though Clearside BioMedical's past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always difficult to predict what will happen in the future and when. The most valuable step is to assess company-specific issues Clearside BioMedical may be facing and whether management guidance has consistently been met in the past. I suggest you continue to research Clearside BioMedical to get a better picture of the stock by looking at:

• 1. Future Outlook: What are well-informed industry analysts predicting for CLSD’s future growth? Take a look at our free research report of analyst consensus for CLSD’s outlook.
• 2. Financial Health: Is CLSD’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.

NB: Figures in this article are calculated using data from the trailing twelve months from 30 September 2017. This may not be consistent with full year annual report figures.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com

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.