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Measuring Sanofi’s (ENXTPA:SAN) track record of past performance is a valuable exercise for investors. It allows us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess SAN’s recent performance announced on 31 March 2018 and compare these figures to its historical trend and industry movements. View our latest analysis for Sanofi
Was SAN’s weak performance lately a part of a long-term decline?
I use data from the most recent 12 months, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This blend enables me to analyze many different companies in a uniform manner using new information. For Sanofi, its latest trailing-twelve-month earnings is €3.54B, which, in comparison to the previous year’s level, has declined by -24.41%. Given that these values may be relatively short-term thinking, I have determined an annualized five-year value for SAN’s net income, which stands at €4.50B This doesn’t look much better, as earnings seem to have consistently been diminishing over the longer term.
What could be happening here? Well, let’s look at what’s occurring with margins and whether the whole industry is experiencing the hit as well. Revenue growth over the past couple of years, has been positive, yet earnings growth has been falling. This suggest that Sanofi has been growing expenses, which is harming margins and earnings, and is not a sustainable practice. Looking at growth from a sector-level, the FR pharmaceuticals industry has been relatively flat in terms of earnings growth over the last couple of years. This shows that whatever near-term headwind the industry is enduring, it’s hitting Sanofi harder than its peers.
What does this mean?
Though Sanofi’s past data is helpful, it is only one aspect of my investment thesis. In some cases, companies that endure an extended period of reduction in earnings are undergoing some sort of reinvestment phase Though if the entire industry is struggling to grow over time, it may be a sign of a structural change, which makes Sanofi and its peers a riskier investment. You should continue to research Sanofi to get a more holistic view of the stock by looking at:
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Future Outlook: What are well-informed industry analysts predicting for SAN’s future growth? Take a look at our free research report of analyst consensus for SAN’s outlook.
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Financial Health: Is SAN’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.
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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.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 March 2018. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.