Assessing Arcus Biosciences Inc’s (NYSE:RCUS) performance as a company requires looking at more than just a years’ earnings data. Below, I will run you through a simple sense check to build perspective on how Arcus Biosciences is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its biotechs industry peers. Check out our latest analysis for Arcus Biosciences

Did RCUS perform worse than its track record and industry?

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 blend enables me to analyze different stocks on a similar basis, using the latest information. For Arcus Biosciences, its latest trailing-twelve-month earnings is -US$58.84M, which, in comparison to last year’s figure, has become more negative. Since these figures are somewhat myopic, I have determined an annualized five-year value for Arcus Biosciences’s earnings, which stands at -US$43.30M. 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 evaluate Arcus Biosciences’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Arcus Biosciences’s top-line more than doubled on average, implying that the business is in a high-growth period with expenses shooting ahead of revenues, leading to annual losses. Viewing growth from a sector-level, the US biotechs industry has been growing its average earnings by double-digit 21.75% in the past year, and 18.58% over the past half a decade. This means any tailwind the industry is profiting from, Arcus Biosciences has not been able to gain as much as its industry peers.

What does this mean?

Arcus Biosciences’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. With companies that are currently loss-making, it is always difficult to forecast what will occur going forward, and when. The most useful step is to examine company-specific issues Arcus Biosciences may be facing and whether management guidance has dependably been met in the past. I recommend you continue to research Arcus Biosciences to get a better picture of the stock by looking at:

1. Financial Health: Is RCUS’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.

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.