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Jazz Pharmaceuticals plc's (NASDAQ:JAZZ) latest earnings announcement in December 2018 signalled that the business faced a minor headwind with earnings falling from US$488m to US$447m, a change of -8.4%. Below, I've laid out key growth figures on how market analysts perceive Jazz Pharmaceuticals'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.
Analysts' outlook for next year seems rather subdued, with earnings climbing by a single digit 5.0%. The growth outlook in the following year seems much more buoyant with rates arriving at double digit 46% compared to today’s earnings, and finally hitting US$797m by 2022.
Even though it is informative knowing the rate of growth each year relative to today’s value, it may be more insightful to gauge the rate at which the business is growing on average every year. The pro of this technique is that we can get a better picture of the direction of Jazz Pharmaceuticals's earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I've appended a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 14%. This means, we can presume Jazz Pharmaceuticals will grow its earnings by 14% every year for the next couple of years.
For Jazz Pharmaceuticals, there are three pertinent aspects you should look at:
- 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 JAZZ 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 JAZZ is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of JAZZ? 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 firstname.lastname@example.org. 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.