Today I will examine iBio Inc’s (AMEX:IBIO) latest earnings update (31 December 2017) and compare these figures against its performance over the past couple of years, in addition to how the rest of IBIO’s industry performed. As a long-term investor, I find it useful to analyze the company’s trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time. View our latest analysis for iBio
Was IBIO’s recent earnings decline worse than the long-term trend and the industry?
I like to use data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This method enables me to assess different stocks on a similar basis, using new information. For iBio, its most recent bottom-line (trailing twelve month) is -US$16.19M, which, against the previous year’s level, has become more negative. Since these figures may be somewhat myopic, I have determined an annualized five-year figure for iBio’s net income, which stands at -US$8.37M. This doesn’t seem to paint a better picture, since earnings seem to have consistently been getting more and more negative over time.We can further assess iBio’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years iBio has seen an annual decline in revenue of -2.15%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Looking at growth from a sector-level, the US biotechs industry has been growing its average earnings by double-digit 24.94% in the past twelve months, and 20.25% over the last five years. This shows that any uplift the industry is benefiting from, iBio has not been able to leverage it as much as its industry peers.
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 occur going forward, and when. The most insightful step is to assess company-specific issues iBio may be facing and whether management guidance has steadily been met in the past. I recommend you continue to research iBio to get a better picture of the stock by looking at:
- 1. Financial Health: Is IBIO’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.
- 2. 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.