The latest earnings release Establishment Labs Holdings Inc.'s (NASDAQ:ESTA) announced in December 2018 confirmed that losses became smaller relative to the prior year's level - great news for investors Below is my commentary, albeit very simple and high-level, on how market analysts perceive Establishment Labs Holdings's earnings growth trajectory over the next couple of 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.
Analysts' outlook for the coming year seems pessimistic, with earnings becoming even more negative, arriving at -US$29.5m in 2020. Moreover, earnings should fall off in the following year, decreasing to -US$19.2m in 2021 and -US$4.3m in 2022.
Although it’s useful to be aware of the rate of growth year by year relative to today’s figure, it may be more insightful evaluating the rate at which the business is growing on average every year. The benefit of this approach is that we can get a bigger picture of the direction of Establishment Labs 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 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 27%. This means, we can assume Establishment Labs Holdings will grow its earnings by 27% every year for the next few years.
For Establishment Labs Holdings, I've put together 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.
Future Earnings: How does ESTA'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.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ESTA? 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 firstname.lastname@example.org. 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.