Interesting revisions recently of analyst estimates on Yahoo Finance. 2012 and 2013 earnings estimates have been lowered to $3.23 and $3.45, respectively. However, the earnings growth estimates have been raised up dramatically for the next 5 years. This year, earnings growth is forecast to be 2207.10% (based on 2011 earnings of $0.14). Next year, earnings are forecast to be 6.80%. The 5 year earnings forecast calls for 176% annualized growth. This would imply growth of about 85% each year in years 3, 4, and 5, if growth is 2207% in year 1 and 6.8% in year 2. If this growth of earnings were to occur, the earnings 5 years from now would be more than $20 per share. I hope they are at least 50% correct and we see $10 per share earnings in 2016. While this year's earnings growth estimate seems fairly accurate, these 5 year numbers seem like a W.A.G. on the part of the analysts. Until this most recent revision, the analysts had the 5 year earnings growth for Vertex at -214% (that is NEGATIVE 214%).
The starting year for the averaged yearly growth rate of 176% must be Year 2011, not Year 2012. When the growth rate is compounded for five years beginning from $0.14 earnings, it is still an impressive number.