Today I will take a look at Monash IVF Group Limited’s (ASX:MVF) most recent earnings update (30 June 2017) and compare these latest figures against its performance over the past few years, as well as how the rest of the biotechnology industry performed. As an investor, I find it beneficial to assess MVF’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time. See our latest analysis for MVF

Were MVF’s earnings stronger than its past performances and the industry?

I 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 technique enables me to analyze different companies on a more comparable basis, using the most relevant data points. For Monash IVF Group, the most recent earnings is A$30M, which compared to the previous year’s level, has grown by a fairly subdued 2.93%. Since these values may be relatively nearsighted, I have created an annualized five-year value for Monash IVF Group’s net income, which stands at A$11M. This means on average, Monash IVF Group has been able to steadily grow its net income over the past few years as well.

How has it been able to do this? Well, let’s take a look at if it is merely attributable to an industry uplift, or if Monash IVF Group has seen some company-specific growth. Over the past couple of years, Monash IVF Group expanded its bottom line faster than revenue by efficiently controlling its costs. This has caused a margin expansion and profitability over time. Viewing growth from a sector-level, the Australian biotechnology industry has been growing, albeit, at a subdued single-digit rate of 9.22% in the prior twelve months, and a substantial 31.57% over the past five years. This shows that whatever uplift the industry is enjoying, Monash IVF Group 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 have performed well in the past, such as Monash IVF Group gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research Monash IVF Group to get a more holistic view of the stock by looking at:

1. Future Outlook: What are well-informed industry analysts predicting for MVF’s future growth? Take a look at our free research report of analyst consensus for MVF’s outlook.

2. Financial Health: Is MVF’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.

NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. 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.