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Will Globus Medical, Inc.'s (NYSE:GMED) Earnings Grow In The Year Ahead?

Simply Wall St

Since Globus Medical, Inc. (NYSE:GMED) released its earnings in December 2018, it seems that analyst expectations are fairly bearish, as a 8.6% rise in profits is expected in the upcoming year, relative to the higher past 5-year average growth rate of 11%. Currently with trailing-twelve-month earnings of US$156m, we can expect this to reach US$170m by 2020. Below is a brief commentary around Globus Medical's earnings outlook going forward, which may give you a sense of market sentiment for the company. For those keen to understand more about other aspects of the company, you can research its fundamentals here.

See our latest analysis for Globus Medical

How is Globus Medical going to perform in the near future?

The longer term expectations from the 13 analysts of GMED is tilted towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To reduce the year-on-year volatility of analyst earnings forecast, I've inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.

NYSE:GMED Past and Future Earnings, April 16th 2019

From the current net income level of US$156m and the final forecast of US$218m by 2022, the annual rate of growth for GMED’s earnings is 11%. This leads to an EPS of $2 in the final year of projections relative to the current EPS of $1.6. Margins are currently sitting at 22%, which is expected to expand to 24% by 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Globus Medical, there are three pertinent factors you should further research:

  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. Valuation: What is Globus Medical 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 Globus Medical is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Globus Medical? 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.