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Illumina, Inc. (NASDAQ:ILMN): Will The Growth Last?

Simply Wall St

In December 2018, Illumina, Inc. (NASDAQ:ILMN) released its most recent earnings announcement, which indicated that the business benefited from a robust tailwind, eventuating to a double-digit earnings growth of 14%. Below, I’ve laid out key growth figures on how market analysts perceive Illumina’s earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.

See our latest analysis for Illumina

Analysts’ expectations for next year seems positive, with earnings rising by a robust 10%. This growth seems to continue into the following year with rates arriving at double digit 28% compared to today’s earnings, and finally hitting US$1.2b by 2022.

NasdaqGS:ILMN Past and Future Earnings, March 11th 2019

Even though it is useful to be aware of the growth rate year by year relative to today’s value, it may be more insightful to gauge the rate at which the business is growing every year, on average. The advantage of this method is that it ignores near term flucuations and accounts for the overarching direction of Illumina’s earnings trajectory over time, which may be more relevant for long term investors. To compute 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 13%. This means, we can anticipate Illumina will grow its earnings by 13% every year for the next few years.

Next Steps:

For Illumina, there are three pertinent aspects 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 ILMN 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 ILMN is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ILMN? 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.