Statutory Profit Doesn't Reflect How Good LifeVantage's (NASDAQ:LFVN) Earnings Are
We've discovered 1 warning sign about LifeVantage. View them for free.
Many investors haven't heard of the accrual ratio from cashflow, but it is actually a useful measure of how well a company's profit is backed up by free cash flow (FCF) during a given period. To get the accrual ratio we first subtract FCF from profit for a period, and then divide that number by the average operating assets for the period. The ratio shows us how much a company's profit exceeds its FCF.
Therefore, it's actually considered a good thing when a company has a negative accrual ratio, but a bad thing if its accrual ratio is positive. While having an accrual ratio above zero is of little concern, we do think it's worth noting when a company has a relatively high accrual ratio. Notably, there is some academic evidence that suggests that a high accrual ratio is a bad sign for near-term profits, generally speaking.
LifeVantage has an accrual ratio of -0.27 for the year to March 2025. Therefore, its statutory earnings were very significantly less than its free cashflow. Indeed, in the last twelve months it reported free cash flow of US$12m, well over the US$9.15m it reported in profit. LifeVantage shareholders are no doubt pleased that free cash flow improved over the last twelve months.
That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates.
Happily for shareholders, LifeVantage produced plenty of free cash flow to back up its statutory profit numbers. Because of this, we think LifeVantage's underlying earnings potential is as good as, or possibly even better, than the statutory profit makes it seem! And on top of that, its earnings per share have grown at an extremely impressive rate over the last year. The goal of this article has been to assess how well we can rely on the statutory earnings to reflect the company's potential, but there is plenty more to consider. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. At Simply Wall St, we found 1 warning sign for LifeVantage and we think they deserve your attention.
This note has only looked at a single factor that sheds light on the nature of LifeVantage's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. For example, many people consider a high return on equity as an indication of favorable business economics, while others like to 'follow the money' and search out stocks that insiders are buying. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks with high insider ownership.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
24 minutes ago
- Yahoo
Cheesecake Factory Inc (CAKE) Q2 2025 Earnings Call Highlights: Record Sales and Strategic ...
Total Revenue: $956 million. Adjusted Net Income Margin: 5.8%. Cheesecake Factory Sales: $683.3 million, up 1% year-over-year. Cheesecake Factory Comparable Sales: Increased 1.2%. North Italia Sales: $90.8 million, up 20% year-over-year. Flower Child Sales: $48.2 million, up 35% year-over-year. Flower Child Comparable Sales: Increased 4%. Restaurant Openings: Eight new restaurants opened in Q2. Cheesecake Factory Restaurant Margin: Increased to 18.5%, up 80 basis points year-over-year. North Italia Restaurant Margin: Improved 290 basis points to 18.2%. Flower Child Restaurant Margin: Reached 20.4%. Cash Balance: $148.8 million. Total Debt: $644 million. Capital Expenditures: Approximately $42 million in Q2. Shareholder Returns: $14.3 million returned via dividends. Warning! GuruFocus has detected 5 Warning Sign with KRC. Release Date: July 29, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Positive Points Cheesecake Factory Inc (NASDAQ:CAKE) reported second quarter results that exceeded expectations, with consolidated revenues and adjusted earnings per share setting new milestones. The company achieved a record high average weekly sales and realized unit volumes of nearly $12.8 million for the quarter. Cheesecake Factory's four-wall restaurant margin increased to 18.5%, the highest level recorded in eight years. The company successfully opened eight new restaurants in the second quarter and plans to open as many as 25 new restaurants in 2025. Flower Child, a concept under Cheesecake Factory Inc, saw second quarter comparable sales increase by 4%, significantly outperforming the Black Box fast casual dining index. Negative Points Comparable sales for North Italia declined by 1%, partly due to the impact of Los Angeles fires and sales transfer from new restaurants. Cheesecake Factory's traffic was down 1.1% in the second quarter, despite a 4% increase in net effective pricing. Other operating expenses increased by 40 basis points, primarily driven by higher facility-related costs. Pre-opening costs rose to $9 million in the quarter compared to $7 million in the prior year period. The company recorded a pre-tax net expense of $1.2 million related to FRC acquisition-related items and impairment of assets and lease termination expenses. Q & A Highlights Q: As it relates to the increase in the net income margin for 2025 from 4.75% to 4.9%, is this primarily operationally driven at the store level? A: Matthew Clark, CFO: Yes, the improvement is operationally driven. Our expectations for the four-wall margin have increased due to better-than-expected Q2 results, reflecting operational excellence and stable sales trends. Q: Can you provide some perspective on labor retention levels relative to pre-pandemic or prior peaks? A: David Gordon, President: Our staff and management retention levels are as good as or better than pre-pandemic levels, driven by our strong company culture and career growth opportunities. This retention helps reduce overtime and training costs, contributing to labor productivity. Q: On Cheesecake Factory, can you share the Q2 breakdown related to price and mix and the implied traffic? A: Matthew Clark, CFO: The net effective pricing in Q2 was about 4% for Cheesecake Factory. Traffic was down 1.1%, and mix accounted for the balance. We aim to improve traffic while maintaining stable sales. Q: Did the February menu update lead to a noticeable customer response in terms of innovation? A: David Gordon, President: Yes, the new menu items were highlighted on a separate card to ensure visibility. The previous menu change in February showed good stickiness, and we expect the new menu to be equally or more successful. Q: Can you provide insights on Flower Child's profitability and unit economics? A: Matthew Clark, CFO: Flower Child's mature unit margins reached 20.4%, with AUVs approaching $5 million. The concept is performing exceptionally well, with returns in the mid-30s, and we expect it to play a larger role in our results going forward. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus.
Yahoo
24 minutes ago
- Yahoo
Incyte Corp (INCY) Q2 2025 Earnings Call Highlights: Strong Revenue Growth and Strategic ...
Total Product Revenues: $1.06 billion, a 17% increase year over year. Total Revenues: $1.2 billion, up 16% from the previous year. Jakafi Net Product Revenue: $764 million, representing an 8% growth year over year. Opzelura Net Product Revenue: $164 million, a 35% increase year over year. Niktimvo Net Product Revenue: $36 million, driven by strong commercial execution. Other Hematology and Oncology Products Revenue: $131 million, a 66% increase year over year. Operating Expenses: Increased 13% year over year, compared to a 16% increase in revenues. R&D Expenses: $495 million for the second quarter, an 8% increase year over year. SG&A Expenses: $331 million for the second quarter, a 16% increase year over year. Contract Dispute Settlement Benefit: $242 million from Novartis relating to Jakafi royalty payments. Full-Year Revenue Guidance for Jakafi: Raised to a range of $3 billion to $3.5 billion. Full-Year Revenue Guidance for Other Oncology Products: Raised to a range of $500 million to $520 million. COGS Guidance: Revised to 8% to 9% of net product revenues. Full-Year R&D Guidance: Increased by $35 million to a range of $1.965 billion to $1.995 billion. Warning! GuruFocus has detected 3 Warning Sign with INCY. Release Date: July 29, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Positive Points Incyte Corp (NASDAQ:INCY) reported strong financial results with total product revenues of $1.06 billion, a 17% increase year over year. The company raised its full-year revenue guidance for Jakafi to a new range of $3 billion to $3.5 billion due to strong demand. Opzelura showed exceptional growth with a 35% increase in net product revenue year over year. Niktimvo's launch exceeded expectations with rapid adoption among BMT centers, achieving 82% account penetration. Incyte Corp (NASDAQ:INCY) is making excellent progress with its R&D pipeline, with several important product launches expected by 2030. Negative Points Incyte Corp (NASDAQ:INCY) faces the challenge of navigating through 2029 and transitioning to new durable product growth drivers. There have been R&D setbacks, and the company needs to convert scientific advancements into regulatory approvals and business results. The early-stage pipeline involves uncertainties, and the company must continuously assess and compare programs based on strategic importance and return on investment. The company is experiencing increased legal costs related to the Novartis contract dispute settlement. The development of '989 in MF has been delayed to ensure a comprehensive data set, pushing the release of data to later in the year. Q & A Highlights Q: Can you share your thoughts on the relative importance of the three therapeutic areas at Incyte: oncology, hematology, and immunology? Do any of those get prioritized in your strategic plan? A: MPNs (myeloproliferative neoplasms) are our most important therapeutic area right now. We have an asymmetrical advantage in that space and a window of opportunity to transform the treatment of these blood cancers. Targeting driver mutations in MPNs is crucial, and we have the potential to create a series of innovations starting with '989. Strategically, this is our number one priority. In immunology, we have a credible path to building a large product, particularly with Povorcitinib. In oncology, we will apply principles to ensure we make good decisions regarding solid tumors. Q: What are your expectations for the CALR data in MF, and is there a minimum threshold for monotherapy activity? A: Mechanistically, the mutant CALR antibody '989 should work similarly in MF as it does in ET. The safety and efficacy seen in ET increase the probability of success in MF. We expect to see improvement in MF in endpoints like spleen size reduction and symptom improvement. The development in MF will likely involve combination with Ruxolitinib, and we aim to present a comprehensive data set later this year. Q: Can you discuss the enthusiasm for Povorcitinib in the HS market and its competitive differentiation? A: HS is one of the most challenging conditions in dermatology. IL-17s don't work almost half the time, and HS involves multiple pathways. Povorcitinib has shown remarkable effects on pain and flare control, making it competitive. It could have a place in the treatment paradigm for HS, either as a starting option or following biologics. The totality of evidence suggests a place for Povorcitinib alongside IL-17s. Q: How do you plan to balance investment in pipeline advancement relative to external opportunities and near-term commercial performance? A: We focus on capital allocation, both internally and externally, without forcing any ratio. We aim to set a new high watermark for the company by getting our growth portfolio right, prioritizing R&D, managing costs, and executing business development effectively. We have a window of opportunity in MPNs to build a great business, and we will focus on converting science into results. Q: What are your thoughts on the peak opportunity for Niktimvo, and has the launch trajectory changed your view? A: It's hard to predict five years out, but the launch has been reassuring. The potential of Niktimvo will depend on getting it into combination with Jakafi and steroids, and developing a subcu formulation. The current trajectory suggests that Niktimvo could perform similarly to or better than REZUROCK, especially if additional indications are achieved. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus.
Yahoo
24 minutes ago
- Yahoo
Kiniksa Pharmaceuticals International PLC (KNSA) Q2 2025 Earnings Call Highlights: Record ...
Net Revenue: $156.8 million in Q2 2025, a 52% year-over-year increase. ARCALYST Net Sales Guidance: Raised to $625 million to $640 million for full year 2025. Net Income: $17.8 million in Q2 2025, compared to a net loss of $3.9 million in Q2 2024. Operating Expenses: Grew 26% year-over-year in Q2 2025. ARCALYST Collaboration Profit: $104.8 million in Q2 2025, a 75% year-over-year increase. Cash Balance: Increased by approximately $40 million to $307.8 million in Q2 2025. Warning! GuruFocus has detected 3 Warning Sign with GPK. Release Date: July 29, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Positive Points Kiniksa Pharmaceuticals International PLC (NASDAQ:KNSA) reported strong revenue growth for ARCALYST, with net revenue reaching $156.8 million in Q2 2025, a 52% year-over-year increase. The company surpassed $1 billion in cumulative net sales for ARCALYST, demonstrating effective commercial strategy and execution. Kiniksa raised its full-year 2025 ARCALYST net sales guidance to between $625 million and $640 million, up from the previous range of $590 million to $605 million. The company has initiated and begun recruiting for the Phase 2/Phase 3 clinical trial of KPL-387, aiming to deliver this treatment option by 2028-2029. Kiniksa's strong financial performance has resulted in a net income of $17.8 million in Q2 2025, compared to a net loss of $3.9 million a year ago, and an increased cash balance of $307.8 million. Negative Points Operating expenses grew 26% year-over-year in Q2 2025, driven by cost of goods sold and collaboration expenses related to ARCALYST revenue growth. The onetime bolus of Medicare Part D patients observed in Q1 will not repeat, potentially impacting future growth rates. Despite strong performance, the company faces emerging competition, including potential oral competitors, which could impact market share. The company has not yet announced specific indications for KPL-1161, leaving uncertainty about its future market potential. Kiniksa's continued growth and expansion efforts may require further investment, potentially impacting cash flow and financial stability. Q & A Highlights Q: Congrats on the quarter. Can you provide commentary on the trends you're seeing in the first recurrent setting, given that 20% of total prescriptions are coming from this setting? A: Yes, we've seen continuous increase in penetration into the 2-plus recurrence group, now at 15%. We've also observed significant growth in early stages of the disease, with around 20% of ARCALYST patients prescribed during their first recurrence. This reflects greater confidence and familiarity among healthcare professionals with prescribing ARCALYST early in the disease course. Q: When you look at patients who've dropped off, was dosing frequency a big driver? How do you see the new start outlook for KPL-387? A: Patients are staying on ARCALYST for an average of 30 months with high compliance. The opportunity for ARCALYST remains significant, especially with 15% penetration. Regarding KPL-387, we are excited about its potential and are leveraging our experience with ARCALYST to ensure successful commercialization. Q: Given the pace of growth, how do you think about expanding the sales force or marketing efforts to drive penetration? A: We continuously analyze the right size for our sales force, currently around 85, and explore new marketing strategies, including digital marketing and AI, to enhance our reach. We are committed to evolving our approach to maximize ARCALYST's potential. Q: On ARCALYST, are you seeing a shorter treatment duration in first recurrence patients compared to those with multiple recurrences? A: We haven't observed significant differences in treatment duration between first recurrence and multiple recurrence patients. The average duration is 30 months, with a median of 17 months, and a restart rate of around 45%. Q: Regarding KPL-387, what is the target efficacy profile, and how do you plan to balance cash flow with initiating studies in new indications? A: For KPL-387, we aim to select a dose that effectively treats acute flares and prevents subsequent ones, similar to ARCALYST. We are focused on maintaining cash flow positivity while advancing our pipeline and exploring strategic initiatives. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
