When Vanda Pharmaceuticals Inc (NASDAQ:VNDA) released its most recent earnings update (31 March 2018), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were Vanda Pharmaceuticals’s average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not VNDA actually performed well. Below is a quick commentary on how I see VNDA has performed. Check out our latest analysis for Vanda Pharmaceuticals
How Well Did VNDA Perform?VNDA is loss-making, with the most recent trailing twelve-month earnings of -US$4.86m (from 31 March 2018), which compared to last year has become less negative. Furthermore, the company’s loss seem to be growing over time, with the five-year earnings average of -US$15.33m. Each year, for the past five years VNDA has seen an annual increase in operating expense growth, outpacing revenue growth of 30.75%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Inspecting growth from a sector-level, the US biotechs industry has been growing its average earnings by double-digit 21.75% in the previous year, and 17.77% over the past five years. This means despite the fact that Vanda Pharmaceuticals is presently loss-making, it may have been aided by industry tailwinds, moving earnings into a more favorable position.
Although Vanda Pharmaceuticals is loss-making, it has a sufficient cash cushion (US$248.83m) to pay for its upcoming operating expenses over the next year. This is a sign of good cash management.
What does this mean?
Though Vanda Pharmaceuticals’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always difficult to forecast what will happen in the future and when. The most insightful step is to assess company-specific issues Vanda Pharmaceuticals may be facing and whether management guidance has regularly been met in the past. I recommend you continue to research Vanda Pharmaceuticals to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for VNDA’s future growth? Take a look at our free research report of analyst consensus for VNDA’s outlook.
- Financial Health: Is VNDA’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.