After looking at TherapeuticsMD Inc’s (NASDAQ:TXMD) latest earnings update (31 March 2018), I found it helpful to revisit the company’s performance in the past couple of years and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is an important aspect. In this article I briefly touch on my key findings. Check out our latest analysis for TherapeuticsMD
Commentary On TXMD’s Past PerformanceTXMD is loss-making, with the most recent trailing twelve-month earnings of -US$80.17m (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$53.52m. Each year, for the past five years TXMD has seen an annual increase in operating expense growth, outpacing revenue growth of 26.31%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Inspecting growth from a sector-level, the US pharmaceuticals industry has been growing its average earnings by double-digit 11.92% in the previous twelve months, and a more muted 9.52% over the past half a decade. This shows that whatever tailwind the industry is deriving benefit from, TherapeuticsMD has not been able to reap as much as its average peer.
Even though TherapeuticsMD is currently unprofitable, it has a sufficient cash cushion (US$107.35m) to pay for its upcoming operating expenses over the next year. This is a sign of good cash management.
What does this mean?
While past data is useful, it doesn’t tell the whole story. With companies that are currently loss-making, it is always hard to predict what will happen in the future and when. The most useful step is to examine company-specific issues TherapeuticsMD may be facing and whether management guidance has consistently been met in the past. I suggest you continue to research TherapeuticsMD to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for TXMD’s future growth? Take a look at our free research report of analyst consensus for TXMD’s outlook.
- Financial Health: Is TXMD’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.