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MongoDB, Inc.'s (NASDAQ:MDB) announced its latest earnings update in January 2019, which confirmed 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 predict MongoDB's earnings growth trajectory over the next few years and whether the future looks brighter. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.
Analysts' outlook for the upcoming year seems pessimistic, with earnings becoming even more negative, generating -US$110.4m in 2020. Furthermore, earnings are expected to fall off in the following year, decreasing to -US$108.5m in 2021 and -US$88.0m in 2022.
Even though it’s informative knowing the rate of growth each year relative to today’s figure, it may be more valuable to gauge the rate at which the business is moving on average every year. The pro of this approach is that it ignores near term flucuations and accounts for the overarching direction of MongoDB's earnings trajectory over time, which may be more relevant for long term investors. To calculate 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 -1.3%. This means, we can anticipate MongoDB will chip away at a rate of -1.3% every year for the next few years.
For MongoDB, there are three fundamental factors 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 MDB 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 MDB is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of MDB? 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.