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Ipsen S.A. (EPA:IPN): Will The Growth Last?

Simply Wall St

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The most recent earnings update Ipsen S.A.'s (EPA:IPN) released in March 2019 showed that the business experienced a robust tailwind, leading to a double-digit earnings growth of 44%. Investors may find it useful to understand how market analysts view Ipsen's earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. 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.

Check out our latest analysis for Ipsen

Analysts' expectations for the coming year seems positive, with earnings expanding by a robust 35%. This growth seems to continue into the following year with rates arriving at double digit 52% compared to today’s earnings, and finally hitting €664m by 2022.

ENXTPA:IPN Past and Future Earnings, July 18th 2019

While it is informative understanding the growth rate each year relative to today’s value, it may be more valuable to evaluate the rate at which the company is rising or falling every year, on average. The advantage of this method is that we can get a bigger picture of the direction of Ipsen'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 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 12%. This means, we can assume Ipsen will grow its earnings by 12% every year for the next couple of years.

Next Steps:

For Ipsen, I've put together three essential factors 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 IPN 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 IPN is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of IPN? 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.