Alliance Pharma plc's (LON:APH) latest earnings announcement in March 2019 showed that the business faced a substantial headwind with earnings falling by -36%. Below, I've presented key growth figures on how market analysts view Alliance Pharma's earnings growth trajectory over the next couple of years and whether the future looks brighter. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
Analysts' outlook for next year seems positive, with earnings climbing by a robust 28%. This growth seems to continue into the following year with rates reaching double digit 56% compared to today’s earnings, and finally hitting UK£32m by 2022.
Although it is useful to be aware of the rate of growth year by year relative to today’s value, it may be more insightful to estimate the rate at which the business is growing every year, on average. The pro of this technique is that we can get a bigger picture of the direction of Alliance Pharma's earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To compute this rate, I put 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 18%. This means, we can presume Alliance Pharma will grow its earnings by 18% every year for the next couple of years.
For Alliance Pharma, I've put together three essential aspects you should further research:
- 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 APH 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 APH is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of APH? 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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If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.