Examining Invitae Corporation’s (NYSE:NVTA) past track record of performance is a valuable exercise for investors. It enables us to understand whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess NVTA’s latest performance announced on 30 September 2017 and weigh these figures against its longer term trend and industry movements. See our latest analysis for Invitae
Was NVTA’s recent earnings decline worse than the long-term trend and the industry?
I prefer to use data from the most recent 12 months, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This allows me to examine different stocks on a similar basis, using the latest information. For Invitae, its latest trailing-twelve-month earnings is -US$107.73M, which compared to last year’s level, has become more negative. Since these figures may be somewhat short-term thinking, I have calculated an annualized five-year value for Invitae’s net income, which stands at -US$70.17M. This doesn’t seem to paint a better picture, as earnings seem to have steadily been getting more and more negative over time.We can further evaluate Invitae’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Invitae’s top-line has grown by 88.76% on average, signalling that the company is in a high-growth phase with expenses racing ahead revenues, leading to annual losses. Inspecting growth from a sector-level, the US biotechs industry has been growing its average earnings by double-digit 13.11% in the past twelve months, and 19.44% over the past half a decade. This suggests that whatever uplift the industry is benefiting from, Invitae has not been able to realize the gains unlike its average peer.
What does this mean?
While past data is useful, it 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 valuable step is to assess company-specific issues Invitae may be facing and whether management guidance has steadily been met in the past. I suggest you continue to research Invitae to get a more holistic view of the stock by looking at:
- 1. Future Outlook: What are well-informed industry analysts predicting for NVTA’s future growth? Take a look at our free research report of analyst consensus for NVTA’s outlook.
- 2. Financial Health: Is NVTA’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.