After looking at Selecta Biosciences Inc’s (NASDAQ:SELB) latest earnings announcement (31 December 2017), I found it useful to revisit the company’s performance in the past couple of years and assess this against the most recent figures. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether Selecta Biosciences’s performance has been impacted by industry movements. In this article I briefly touch on my key findings. Check out our latest analysis for Selecta Biosciences
Did SELB perform worse than its track record and industry?
For the purpose of this commentary, I like to use data from the most recent 12 months, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This technique enables me to examine various companies on a more comparable basis, using the most relevant data points. For Selecta Biosciences, its latest earnings (trailing twelve month) is -US$65.32M, which, against last year’s figure, has become more negative. Since these values are fairly short-term thinking, I’ve estimated an annualized five-year value for SELB’s earnings, which stands at -US$38.86M. This doesn’t look much better, since earnings seem to have steadily been getting more and more negative over time.
We can further evaluate Selecta Biosciences’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Selecta Biosciences’s top-line has increased by a mere 4.58%, on average. The company’s inability to breakeven has been aided by the relatively flat top-line in the past. Viewing growth from a sector-level, the US biotechs industry has been growing its average earnings by double-digit 24.29% in the past twelve months, and 20.47% over the past half a decade. This means whatever tailwind the industry is profiting from, Selecta Biosciences has not been able to leverage it as much as its average peer.
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 envisage what will occur going forward, and when. The most valuable step is to examine company-specific issues Selecta Biosciences may be facing and whether management guidance has dependably been met in the past. I suggest you continue to research Selecta Biosciences to get a more holistic view of the stock by looking at: