Assessing Calithera Biosciences Inc’s (NASDAQ:CALA) past track record of performance is a valuable exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess CALA’s recent performance announced on 30 September 2017 and evaluate these figures to its longer term trend and industry movements. View our latest analysis for Calithera Biosciences

Could CALA beat the long-term trend and outperform its industry?

I prefer to 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 allows me to assess different companies on a similar basis, using the most relevant data points. For Calithera Biosciences, its most recent bottom-line (trailing twelve month) is -US$26.37M, which, in comparison to the prior year’s level, has become less negative. Given that these figures may be fairly nearsighted, I have created an annualized five-year value for Calithera Biosciences’s earnings, which stands at -US$25.97M. This means that, Calithera Biosciences has historically performed better than recently, while it seems like earnings are now heading back towards a more favorable position once more.

We can further assess Calithera Biosciences’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Calithera Biosciences’s top-line more than doubled on average, indicating that the business is in a high-growth period with expenses shooting ahead of revenues, leading to annual losses. Eyeballing growth from a sector-level, the US biotechs industry has been growing its average earnings by double-digit 22.22% in the prior year, and 19.88% over the past half a decade. This means that, while Calithera Biosciences is presently unprofitable, it may have benefited from industry tailwinds, moving earnings into a more favorable position.

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 predict what will happen in the future and when. The most valuable step is to assess company-specific issues Calithera Biosciences may be facing and whether management guidance has steadily been met in the past. I suggest you continue to research Calithera Biosciences to get a better picture of the stock by looking at:

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

• 2. Financial Health: Is CALA’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 trailing twelve months from 30 September 2017. 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.