The latest earnings announcement DURECT Corporation (NASDAQ:DRRX) released in December 2018 suggested that losses became smaller relative to the prior year's level - great news for investors Investors may find it useful to understand how market analysts view DURECT's earnings growth outlook over the next few 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.
Market analysts' consensus outlook for the coming year seems pessimistic, with earnings becoming even more negative, reaching -US$31.7m in 2020. However, earnings are predicted to move into an upward direction, generating -US$32.8m in 2021, before plateauing down to -US$30.2m in 2022.
Although it is useful to understand the growth rate year by year relative to today’s level, it may be more valuable to estimate the rate at which the business is rising or falling every year, on average. The benefit of this method is that we can get a better picture of the direction of DURECT's earnings trajectory over the long run, irrespective of near term fluctuations, be more volatile. To compute 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 18%. This means, we can anticipate DURECT will grow its earnings by 18% every year for the next few years.
For DURECT, I've put together three pertinent 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.
- Management:Have insiders been ramping up their shares to take advantage of the market's sentiment for DRRX's future outlook? Check out our management and board analysis with insights on CEO compensation and governance factors.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of DRRX? 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.