AnaptysBio (NASDAQ: ANAB) performs even better than its earnings suggest

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Investors were disappointed with the strong earnings posted by AnaptysBio, Inc. (NASDAQ: ANAB) recently. We’ve done some research and actually think they’re unnecessarily pessimistic.

Check out our latest review for AnaptysBio

NasdaqGS: ANAB Revenue and Revenue History November 11, 2021

Focus on AnaptysBio revenues

In high finance, the key ratio used to measure how well a company converts reported profits into free cash flow (FCF) is the accumulation rate (from cash). The accrual ratio subtracts the FCF from the profit for a given period and divides the profit by the average operating assets of the company over that period. The ratio shows us by how much a company’s profit exceeds its FCF.

Therefore, it is actually considered a good thing when a company has a negative accumulation ratio, but a bad thing if its accumulation ratio is positive. While it is not a problem to have a positive accumulation ratio, indicating a certain level of non-cash profits, a high accumulation ratio is arguably a bad thing, as it indicates that paper profits do not match. to cash flow. Notably, some academic evidence suggests that a high accrual ratio is a bad sign for short-term profits, in general.

For the year ending September 2021, AnaptysBio had a accrual ratio of -0.44. This indicates that its free cash flow has greatly exceeded its statutory profit. Namely, it generated free cash flow of US $ 15 million during the period, eclipsing its reported profit of US $ 8.39 million. Given that AnaptysBio had negative free cash flow in the previous corresponding period, the last twelve month result of $ 15 million appears to be a step in the right direction.

This might make you wonder what analysts are predicting in terms of future profitability. Fortunately, you can click here to see an interactive graph depicting future profitability, based on their estimates.

Our perspective on AnaptysBio’s earnings performance

Luckily for shareholders, AnaptysBio generated plenty of free cash flow to support its statutory profit numbers. For this reason, we believe that the underlying revenue potential of AnaptysBio is as good, if not better, than the statutory profit suggests! And one can certainly find a bright spot in the fact that he made a profit this year, despite losing money last year. Of course, we’ve only scratched the surface when it comes to analyzing his income; one could also consider margins, growth forecasts and return on investment, among other factors. If you are interested in learning more about AnaptysBio as a business, it is important to be aware of the risks it faces. For example, we found that AnaptysBio has 2 warning signs (1 cannot be ignored!) Which deserve your attention before going any further in your analysis.

This memo has considered only one factor that sheds light on the nature of AnaptysBio’s profit. But there are plenty of other ways to tell your opinion about a business. For example, many people see a high return on equity as an indication of a favorable business economy, while others like to “follow the money” and look for stocks that insiders are buying. So you might want to see this free a set of companies with a high return on equity, or that list of stocks that insiders buy.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in the mentioned stocks.

Do you have any feedback on this item? Are you worried about the content? Get in touch with us directly. You can also send an email to the editorial team (at) simplywallst.com.


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