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What Are Analysts Saying About Medidata Solutions, Inc.’s (NASDAQ:MDSO) Earnings Trajectory?

Andy Nguyen

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In December 2018, Medidata Solutions, Inc. (NASDAQ:MDSO) released its latest earnings announcement, which suggested that the business benefited from a robust tailwind, leading to a double-digit earnings growth of 17%. Below, I’ve laid out key growth figures on how market analysts perceive Medidata Solutions’s earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.

View our latest analysis for Medidata Solutions

Market analysts’ prospects for next year seems pessimistic, with earnings declining by a double-digit -16%. However, the next few years seem to illustrate a completely different picture, with expected earnings growth rates generating double digit 25% compared to today’s level and continues to increase.

NASDAQGS:MDSO Future Profit February 18th 19

Although it is helpful to understand the growth year by year relative to today’s level, it may be more beneficial gauging the rate at which the earnings are moving on average every year. The advantage of this method is that it removes the impact of near term flucuations and accounts for the overarching direction of Medidata Solutions’s earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I’ve appended 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 17%. This means, we can expect Medidata Solutions will grow its earnings by 17% every year for the next couple of years.

Next Steps:

For Medidata Solutions, I’ve put together three key aspects you should further research:

  1. 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.
  2. Valuation: What is MDSO 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 MDSO is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of MDSO? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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. On rare occasion, data errors may occur. Thank you for reading.