Based on Veeva Systems Inc.'s (NYSE:VEEV) earnings update in April 2019, the consensus outlook from analysts appear somewhat bearish, with earnings expected to grow by 10% in the upcoming year relative to the higher past 5-year average growth rate of 43%. Currently with trailing-twelve-month earnings of US$230m, we can expect this to reach US$254m by 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for Veeva Systems in the longer term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
Can we expect Veeva Systems to keep growing?
The view from 18 analysts over the next three years is one of positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To understand the overall trajectory of VEEV's earnings growth over these next fews years, I've fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
From the current net income level of US$230m and the final forecast of US$341m by 2022, the annual rate of growth for VEEV’s earnings is 14%. EPS reaches $2.34 in the final year of forecast compared to the current $1.59 EPS today. This high rate of growth of revenue squeezes margins, as analysts predict an upcoming margin contraction from the current 27% to 24% by the end of 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Veeva Systems, I've put together three relevant aspects 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 Veeva Systems 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 Veeva Systems is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Veeva Systems? 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 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.