When Everspin Technologies Inc (NASDAQ:MRAM) released its most recent earnings update (30 September 2017), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Understanding how Everspin Technologies performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see MRAM has performed. See our latest analysis for Everspin Technologies
Was MRAM’s weak performance lately a part of a long-term decline?
For the purpose of this commentary, I like to use the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This allows me to assess many different companies on a similar basis, using the most relevant data points. For Everspin Technologies, its most recent bottom-line (trailing twelve month) is -US$22.03M, which, against last year’s figure, has become more negative. Given that these figures are fairly nearsighted, I’ve calculated an annualized five-year figure for MRAM’s net income, which stands at -US$17.81M. This doesn’t look much better, as earnings seem to have steadily been getting more and more negative over time.We can further analyze Everspin Technologies’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Everspin Technologies’s top-line has risen by a mere 9.26%, on average. The company’s inability to breakeven has been aided by the relatively flat top-line in the past. Eyeballing growth from a sector-level, the US semiconductor industry has been growing its average earnings by double-digit 11.57% over the previous year, and a more muted 7.55% over the past half a decade. This suggests that any uplift the industry is benefiting from, Everspin Technologies 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. With companies that are currently loss-making, it is always difficult to envisage what will occur going forward, and when. The most valuable step is to examine company-specific issues Everspin Technologies may be facing and whether management guidance has regularly been met in the past. You should continue to research Everspin Technologies to get a more holistic view of the stock by looking at:
- 1. Future Outlook: What are well-informed industry analysts predicting for MRAM’s future growth? Take a look at our free research report of analyst consensus for MRAM’s outlook.
- 2. Financial Health: Is MRAM’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.