In January 2018, Ambarella Inc (NASDAQ:AMBA) announced its latest earnings update, which showed that the company experienced a significant headwind with earnings declining by -67.39%. Below, I’ve laid out key numbers on how market analysts view Ambarella’s earnings growth outlook over the next few 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. Check out our latest analysis for Ambarella
Market analysts’ consensus outlook for the coming year seems pessimistic, with earnings decreasing by a double-digit -85.15%. Over the medium term, earnings are expected to continue to be below today’s level, with a decline of -51.03% in 2020, eventually reaching US$9.23M in 2021.
Although it is informative knowing the growth rate each year relative to today’s figure, it may be more valuable gauging the rate at which the earnings are rising or falling on average every year. The advantage of this technique is that we can get a bigger picture of the direction of Ambarella’s earnings trajectory over the long run, irrespective of near term fluctuations, be more volatile. To compute this rate, I put 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 -69.64%. This means that, we can presume Ambarella will chip away at a rate of -69.64% every year for the next couple of years.
For Ambarella, I’ve compiled three essential aspects 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.
- Valuation: What is AMBA 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 AMBA is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of AMBA? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.