What Should We Expect From Roche Holding AG's (VTX:ROG) Earnings In The Years Ahead?
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The latest earnings announcement Roche Holding AG (VTX:ROG) released in January 2019 suggested that the business experienced a strong tailwind, leading to a double-digit earnings growth of 22%. Below is my commentary, albeit very simple and high-level, on how market analysts perceive Roche Holding's earnings growth trajectory over the next few years and whether the future looks even brighter than the past. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.
See our latest analysis for Roche Holding
Analysts' outlook for this coming year seems optimistic, with earnings climbing by a robust 33%. This growth seems to continue into the following year with rates reaching double digit 35% compared to today’s earnings, and finally hitting CHF15b by 2022.
Even though it’s helpful to be aware of the growth rate each year relative to today’s level, it may be more valuable gauging the rate at which the earnings are growing on average every year. The pro of this method is that it removes the impact of near term flucuations and accounts for the overarching direction of Roche Holding's earnings trajectory over time, which may be more relevant for long term investors. 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 10%. This means, we can anticipate Roche Holding will grow its earnings by 10% every year for the next few years.
Next Steps:
For Roche Holding, there are three fundamental aspects you should further examine:
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 ROG 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 ROG is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ROG? 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 editorial-team@simplywallst.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.
