When Pharmesis International Ltd’s (SGX:BFK) announced its latest earnings (31 December 2017), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were Pharmesis International’s average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not BFK actually performed well. Below is a quick commentary on how I see BFK has performed. Check out our latest analysis for Pharmesis International

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

To account for any quarterly or half-yearly updates, 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 blend allows me to examine many different companies in a uniform manner using the most relevant data points. For Pharmesis International, its latest trailing-twelve-month earnings is -CN¥2.48M, which, relative to the prior year’s level, has become less negative. Since these values may be somewhat short-term, I have calculated an annualized five-year figure for BFK’s net income, which stands at -CN¥6.18M. This means that, although net income is negative, it has become less negative over the years.

We can further analyze Pharmesis International’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Pharmesis International’s revenue growth has been fairly subdued, with an annual growth rate of 0.67%, on average. The company’s inability to breakeven has been aided by the relatively flat top-line in the past. Eyeballing growth from a sector-level, the SG pharmaceuticals industry has been growing, albeit, at a subdued single-digit rate of 7.97% over the past twelve months, and a substantial 10.26% over the previous five years. This suggests that, even though Pharmesis International is presently running a loss, it may have been aided by industry tailwinds, moving earnings in the right direction.

What does this mean?

Pharmesis International’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 forecast what will occur going forward, and when. The most insightful step is to examine company-specific issues Pharmesis International may be facing and whether management guidance has regularly been met in the past. I recommend you continue to research Pharmesis International to get a more holistic view of the stock by looking at: