We are going to take a close look at [market_watch ticker=ELGX item=name value=”Endologix Inc.”] ([market_watch ticker=ELGX item=ticker value=”NASDAQ: ELGX”]) today to get a better sense of the company and its current status, as well as the opportunity it may offer for prospective investors. Today’s focus will be a fundamental evaluation of the stock from top to bottom.
As such, let’s start with the top line: Revenue trends.
Last quarter, the company saw its overall sales move to [market_watch ticker=ELGX item=sales_mrq value=”47.46M”] in total revenues. That represents an overall change in revenues, on a quarterly year/year basis, of [market_watch ticker=ELGX item=rev_grth value=”0.17%”]. If we translate that into sequential terms, the company saw sales [market_watch ticker=ELGX item=grth_dec value=”decline”] by [market_watch ticker=ELGX item=sales_grth value=”-0.1%”] from quarter to quarter.
Sales data gives you a great sense of whether or not a go-to-market strategy is hitting the right note. But operational execution on every level is how great companies manifest their greatness. And that only really shows up on the bottom line. As such, let?s take a look at that set of data.
[market_watch ticker=ELGX item=name value=”Endologix Inc.”] ([market_watch ticker=ELGX item=ticker value=”NASDAQ: ELGX”]) is intriguing when broken down to its core data. The cost of selling goods last quarter was [market_watch ticker=ELGX item=cost_gsold value=”18M”], yielding a gross basic income of [market_watch ticker=ELGX item=gross_income value=”29.46M”]. For shareholders, given the total diluted outstanding shares of [market_watch ticker=ELGX item=total_do_shares value=”82.69M”], this means an overall earnings per share of [market_watch ticker=ELGX item=eps value=”(0.30)”]. Note, this compares with a consensus analyst forecast of [market_watch ticker=ELGX item=eps_forecast value=”-0.16″] in earnings per share for its next fiscal quarterly report.
With that in mind, what are folks on Wall Street expecting out of the company? Let?s take a quick look before we dig into the balance sheet and the company?s cash situation.
At present, analysts hold a consensus average recommendation of [market_watch ticker=ELGX item=an_recommend value=”Overweight”]. This is based on a total of [market_watch ticker=ELGX item=num_an value=”11″]. While we don’t suggest taking analyst recommendations as face value plans for action in a portfolio, we do think it is important to note where consensus is on a stock to understand what basic assumptions are perhaps already discounted into market pricing of shares of the stock.
As far as price targets, analysts currently have an average target on shares of at [market_watch ticker=ELGX item=avg_prc_tgt value=”8.18″]. In addition, if we turn to next year, we see estimates of a fiscal year forecast to bring about [market_watch ticker=ELGX item=next_fi_estm value=”-0.40″] in total earnings per share. On a median price to earnings ratio basis, that outlook adds up to a valuation of [market_watch ticker=ELGX item=median_pe value=”9,999″] times earnings.
At the end of the day, things aren?t always rosy. And it?s important to know whether or not a company has the intestinal fortitude to weather a storm. And that?s a question of balance sheet health and cash flows from operations.
As the reader is no doubt aware, for any company, balance sheet health sits at the heart of the company’s capacity to stand up to the demands and obligations incurred by normal and contingent operations, which in turn lies at the core of a company’s ability to retain the faith of investors in the marketplace. For [market_watch ticker=ELGX item=ticker value=”NASDAQ: ELGX”], the company presently holds about [market_watch ticker=ELGX item=cash_mrq value=”28.12M”] in cash in the coffers. That cash is balanced against about [market_watch ticker=ELGX item=debt_mrq value=”-“] in total current liabilities.
It’s important to consider both a static and dynamic picture, particularly where debt levels are concerned. This means, we need to take into account any trends. In this case, the company’s debt has been [market_watch ticker=ELGX item=grth_fail value=”falling”]. The company also has [market_watch ticker=ELGX item=total_assets value=”359.68M”] in total assets, balanced by [market_watch ticker=ELGX item=total_liab value=”246.89M”] in total liabilities, which suggests where this story might go under adverse economic or financial conditions.
As far as cash flows, the company saw a free cash flow last quarter of [market_watch ticker=ELGX item=free_cash_flow value=”(15.48M)”], representing a quarterly net change in cash of [market_watch ticker=ELGX item=net_change_cash value=”4.1M”]. On a net operating level, the company saw about [market_watch ticker=ELGX item=net_op_cash value=”(14.74M)”] in cash flow.
We will update the interesting story of [market_watch ticker=ELGX item=name value=”Endologix Inc.”] ([market_watch ticker=ELGX item=ticker value=”NASDAQ: ELGX”]) as new events transpire.