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Compugen Ltd (NASDAQ:CGEN): Should The Future Outlook Worry You?

Bruce Howe

Compugen Ltd’s (NASDAQ:CGEN) most recent earnings announcement in December 2017 suggested company earnings became less negative compared to the previous year’s level as a result of recent tailwinds Today I want to provide a brief commentary on how market analysts view Compugen’s earnings growth outlook 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. Check out our latest analysis for Compugen

Market analysts’ consensus outlook for this coming year seems pessimistic, with earnings becoming even more negative, reaching -US$41.85M in 2019. In addition, earnings are expected to fall off in the following year, dwindling to -US$48.85M in 2020 and -US$56.73M in 2021.

NasdaqGM:CGEN Future Profit Mar 20th 18

Even though it’s helpful to understand the rate of growth year by year relative to today’s figure, it may be more insightful determining the rate at which the business is growing every year, on average. The advantage of this method is that we can get a bigger picture of the direction of Compugen’s earnings trajectory over the long run, irrespective of near term fluctuations, fluctuate up and down. To calculate this rate, I’ve inserted a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is -13.94%. This means, we can expect Compugen will chip away at a rate of -13.94% every year for the next few years.

Next Steps:

For Compugen, I’ve put together three pertinent aspects you should look at:

  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. Future Earnings: How does CGEN’s growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of CGEN? 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 pass 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.