The latest earnings release ARMO BioSciences Inc’s (NASDAQ:ARMO) announced in December 2017 indicated company earnings became less negative compared to the previous year’s level – great news for investors Below is my commentary, albeit very simple and high-level, on how market analysts perceive ARMO BioSciences’s earnings growth outlook over the next couple of years and whether the future looks brighter. 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 ARMO BioSciences
Analysts’ expectations for this coming year seems pessimistic, with earnings becoming even more negative, generating -US$70.71M in 2019. Moreover, earnings are expected to fall off in the following year, dwindling to -US$83.15M in 2020 and -US$128.87M in 2021.
While it’s helpful to be aware of the rate of growth year by year relative to today’s value, it may be more valuable analyzing the rate at which the company is growing every year, on average. The advantage of this approach is that we can get a better picture of the direction of ARMO BioSciences’s earnings trajectory over the long run, irrespective of near term fluctuations, fluctuate up and down. 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 -25.96%. This means that, we can expect ARMO BioSciences will chip away at a rate of -25.96% every year for the next couple of years.
For ARMO BioSciences, there are three pertinent factors 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.
- Future Earnings: How does ARMO’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 ARMO? 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.