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Yandex N.V.'s (NASDAQ:YNDX) latest earnings announcement in December 2018 signalled that the business gained from a major tailwind, more than doubling its earnings from the prior year. Below is my commentary, albeit very simple and high-level, on how market analysts predict Yandex's earnings growth outlook over the next couple of years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
Market analysts' consensus outlook for the upcoming year seems pessimistic, with earnings falling by a double-digit -47%. In the next couple of years, earnings are expected to continue to be below today's level, with a decline of -25% in 2021, eventually reaching RUруб36b in 2022.
Although it is informative understanding the growth rate each year relative to today’s figure, it may be more valuable to determine the rate at which the earnings are moving every year, on average. The advantage of this technique is that it removes the impact of near term flucuations and accounts for the overarching direction of Yandex's earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I put 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 that, we can expect Yandex will grow its earnings by 12% every year for the next few years.
For Yandex, I've compiled three relevant aspects 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.
- Valuation: What is YNDX 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 YNDX is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of YNDX? 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.