The latest earnings announcement Amicus Therapeutics, Inc. (NASDAQ:FOLD) released in December 2018 confirmed that losses became smaller relative to the prior year’s level as a result of recent tailwinds Below is my commentary, albeit very simple and high-level, on how market analysts perceive Amicus Therapeutics’s earnings growth trajectory over the next few years and whether the future looks brighter. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.
Market analysts’ prospects for next year seems positive, with earnings becoming less negative, generating -US$236.8m in 2020. However, earnings are expected to fall off in the following year, falling to -US$190.1m in 2021 and -US$164.2m in 2022.
While it is helpful to understand the rate of growth year by year relative to today’s figure, it may be more insightful to determine the rate at which the business is growing every year, on average. The advantage of this technique is that it removes the impact of near term flucuations and accounts for the overarching direction of Amicus Therapeutics’s earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I’ve inserted a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 42%. This means that, we can presume Amicus Therapeutics will grow its earnings by 42% every year for the next few years.
For Amicus Therapeutics, I’ve compiled three pertinent factors you should look at:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is FOLD worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether FOLD is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of FOLD? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
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