When Cyclacel Pharmaceuticals Inc (NASDAQ:CYCC) released its most recent earnings update (30 September 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 Cyclacel Pharmaceuticals 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 CYCC has performed. Check out our latest analysis for Cyclacel Pharmaceuticals

Was CYCC’s recent earnings decline indicative of a tough track record?

For the purpose of this commentary, I like 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 allows me to analyze many different companies in a uniform manner using the latest information. For Cyclacel Pharmaceuticals, its most recent bottom-line (trailing twelve month) is -$15.7M, which, against last year’s level, has become more negative. Given that these values are somewhat short-term, I’ve determined an annualized five-year figure for CYCC’s earnings, which stands at -$15.7M. This means though net income is negative, it has become less negative over the years.

Additionally, we can assess Cyclacel Pharmaceuticals’s loss by looking at what’s going on in the industry as well as within the company. Initially, I want to briefly look into the line items. Revenue growth over the past few years has risen by 19.14%, signalling that Cyclacel Pharmaceuticals is in a high-growth period with expenses shooting ahead of elevated top-line growth rates, leading to yearly losses. Looking at growth from a sector-level, the US biotechs industry has been growing its average earnings by double-digit 12.32% over the past twelve months, and 19.86% over the previous few years. This shows that whatever tailwind the industry is benefiting from, Cyclacel Pharmaceuticals has not been able to gain as much as its average peer.

What does this mean?

Though Cyclacel Pharmaceuticals’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always hard to envisage what will occur going forward, and when. The most useful step is to assess company-specific issues Cyclacel Pharmaceuticals may be facing and whether management guidance has steadily been met in the past. You should continue to research Cyclacel Pharmaceuticals to get a better picture of the stock by looking at:

1. Financial Health: Is CYCC’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. 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.