When Cynata Therapeutics Limited (ASX:CYP) released its most recent earnings update (30 June 2017), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well Cynata Therapeutics has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I’ve summarized the key takeaways on how I see CYP has performed. View our latest analysis for Cynata Therapeutics
How CYP fared against its long-term earnings performance and its industry
For the most up-to-date info, I use the ‘latest twelve-month’ data, 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 blend enables me to examine many different companies on a similar basis, using the most relevant data points. Cynata Therapeutics’s latest twelve-month earnings -A$5M, which, in comparison to last year’s level, has become less negative. Since these figures are fairly myopic, I’ve calculated an annualized five-year value for CYP’s earnings, which stands at -A$3M. This means Cynata Therapeutics has historically performed better than recently, though it seems like earnings are now heading back towards to right direction again.
We can further evaluate Cynata Therapeutics’s loss by researching what’s going on in the industry along with within the company. Initially, I want to quickly look into the line items. Revenue growth over last couple of years has increased by 49.22%, implying that Cynata Therapeutics is in a high-growth period with expenses racing ahead elevated top-line growth rates. Inspecting growth from a sector-level, the Australian biotechnology industry has been growing, albeit, at a unexciting single-digit rate of 9.22% in the prior year, and a substantial 31.57% over the past couple of years. This shows that whatever uplift the industry is benefiting from, Cynata Therapeutics has not been able to reap as much as its industry peers.
What does this mean?
Cynata Therapeutics’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 hard to envisage what will happen in the future and when. The most insightful step is to assess company-specific issues Cynata Therapeutics may be facing and whether management guidance has regularly been met in the past. I suggest you continue to research Cynata Therapeutics to get a more holistic view of the stock by looking at: