For investors with a long-term horizon, assessing earnings trend over time and against industry benchmarks is more valuable than looking at a single earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on Retrophin Inc (NASDAQ:RTRX) useful as an attempt to give more color around how Retrophin is currently performing. Check out our latest analysis for Retrophin
Could RTRX beat the long-term trend and outperform its industry?RTRX is loss-making, with the most recent trailing twelve-month earnings of -US$67.02m (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$26.01m. Each year, for the past five years RTRX has seen an annual increase in operating expense growth, outpacing revenue growth of 46.41%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Viewing growth from a sector-level, the US biotechs industry has been growing its average earnings by double-digit 21.75% in the previous twelve months, and 17.77% over the past five. This shows that any uplift the industry is enjoying, Retrophin has not been able to leverage it as much as its average peer.
Even though Retrophin is currently unprofitable, it has a sufficient cash cushion (US$264.06m) to pay for its upcoming operating expenses over the next year. This is a strong indication of good cash management.
What does this mean?
Though Retrophin’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 examine company-specific issues Retrophin may be facing and whether management guidance has dependably been met in the past. I recommend you continue to research Retrophin to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for RTRX’s future growth? Take a look at our free research report of analyst consensus for RTRX’s outlook.
- Financial Health: Is RTRX’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.