The latest earnings update OrganiGram Holdings Inc. (CVE:OGI) released in August 2018 confirmed that the business finally turned profitable after negative earnings on average over the last couple of years. Below, I’ve laid out key growth figures on how market analysts perceive OrganiGram Holdings’s earnings growth trajectory over the next few years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
Market analysts’ consensus outlook for this coming year seems buoyant, with earnings growing by a robust 23%. This growth in earnings is expected to continue at an exponential rate, bringing the bottom line up to CA$87m by 2021.
Even though it’s informative knowing the rate of growth year by year relative to today’s figure, it may be more valuable determining the rate at which the earnings are moving every year, on average. The advantage of this method is that we can get a bigger picture of the direction of OrganiGram Holdings’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate 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 43%. This means that, we can expect OrganiGram Holdings will grow its earnings by 43% every year for the next couple of years.
For OrganiGram Holdings, there are three fundamental factors 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 OGI 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 OGI is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of OGI? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.