Understanding how Merrimack Pharmaceuticals Inc (NASDAQ:MACK) is performing as a company requires looking at more than just a years’ earnings. Today I will run you through a basic sense check to gain perspective on how Merrimack Pharmaceuticals is doing by comparing its latest earnings with its long-term trend as well as the performance of its biotechnology industry peers. View our latest analysis for Merrimack Pharmaceuticals
How Well Did MACK Perform?
To account for any quarterly or half-yearly updates, 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 enables me to analyze various companies in a uniform manner using the latest information. Merrimack Pharmaceuticals’s most recent twelve-month earnings -$99.2M, which, relative to the prior year’s level, has become less negative. Since these figures are somewhat myopic, I have determined an annualized five-year value for MACK’s net income, which stands at -$110.2M. This shows that, despite the fact that net income is negative, it has become less negative over the years.We can further examine Merrimack Pharmaceuticals’s loss by looking at what has been happening in the industry along with within the company. First, I want to quickly look into the line items. Revenue growth over the past couple of years has increased by 22.44%, implying that Merrimack Pharmaceuticals is in a high-growth period with expenses racing ahead elevated top-line growth rates. Viewing growth from a sector-level, the US biotechnology industry has been growing its average earnings by double-digit 11.07% in the past year, and 20.18% over the past five. This means despite the fact that Merrimack Pharmaceuticals is presently unprofitable, it may have benefited from industry tailwinds, moving earnings in the right direction.
What does this mean?
Merrimack Pharmaceuticals’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that incur net loss is always hard to envisage what will happen in the future and when. The most useful step is to assess company-specific issues Merrimack Pharmaceuticals may be facing and whether management guidance has consistently been met in the past. You should continue to research Merrimack Pharmaceuticals to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for MACK’s future growth? Take a look at our free research report of analyst consensus for MACK’s outlook.
2. Financial Health: Is MACK’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 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.