Examining how Impax Laboratories Inc (NASDAQ:IPXL) is performing as a company requires looking at more than just a years’ earnings. Below, I will run you through a simple sense check to build perspective on how Impax Laboratories is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its pharmaceuticals industry peers. Check out our latest analysis for Impax Laboratories

Commentary On IPXL’s Past Performance

I prefer to use data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This blend allows me to analyze different companies in a uniform manner using new information. For Impax Laboratories, its latest trailing-twelve-month earnings is -US$469.29M, which, in comparison to the previous year’s figure, has become less negative. Since these values are relatively short-term thinking, I have estimated an annualized five-year value for Impax Laboratories’s net income, which stands at -US$51.14M. This shows that, Impax Laboratories has historically performed better than recently, even though it seems like earnings are now heading back in the right direction again.

We can further examine Impax Laboratories’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Impax Laboratories’s top-line has grown by a mere 8.67%, on average. The company’s inability to breakeven has been aided by the relatively flat top-line in the past. Looking at growth from a sector-level, the US pharmaceuticals industry has been growing its average earnings by double-digit 11.73% over the previous twelve months, and a more muted 9.75% over the previous five years. This means that any tailwind the industry is benefiting from, Impax Laboratories has not been able to realize the gains unlike its industry peers.

What does this mean?

While past data is useful, it doesn’t tell the whole story. With companies that are currently loss-making, it is always difficult to predict what will occur going forward, and when. The most useful step is to examine company-specific issues Impax Laboratories may be facing and whether management guidance has regularly been met in the past. You should continue to research Impax Laboratories to get a more holistic view of the stock by looking at:

1. Financial Health: Is IPXL’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. Valuation: What is IPXL worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether IPXL is currently mispriced by the market.

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 31 December 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.