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What Should You Know About Neogen Corporation's (NASDAQ:NEOG) Future?

Simply Wall St

In February 2019, Neogen Corporation (NASDAQ:NEOG) announced its earnings update. Overall, analyst forecasts seem fairly subdued, with profits predicted to rise by 3.2% next year against the higher past 5-year average growth rate of 19%. By 2020, we can expect Neogen’s bottom line to reach US$65m, a jump from the current trailing-twelve-month of US$63m. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for Neogen in the longer term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.

Check out our latest analysis for Neogen

Exciting times ahead?

The view from 6 analysts over the next three years is one of positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. I've plotted out each year's earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of NEOG's earnings growth over these next few years.

NasdaqGS:NEOG Past and Future Earnings, July 22nd 2019

From the current net income level of US$63m and the final forecast of US$79m by 2022, the annual rate of growth for NEOG’s earnings is 8.9%. EPS reaches $1.45 in the final year of forecast compared to the current $1.23 EPS today. Margins are currently sitting at 16%, approximately the same as previous years. With analysts forecasting revenue growth of 0.24025 and NEOG's net income growth expected to roughly track that, this company may add value for shareholders over time.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Neogen, I've put together three important aspects you should further examine:

  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 Neogen 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 Neogen is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Neogen? 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.