The most recent earnings release Pharming Group N.V.'s (AMS:PHARM) announced in December 2018 suggested that the business finally turned profitable after losses on average over the past couple of years. Below, I've laid out key growth figures on how market analysts predict Pharming Group's earnings growth trajectory over the next few years and whether the future looks brighter. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
Market analysts' consensus outlook for the upcoming year seems buoyant, with earnings increasing by a robust 15%. This growth in earnings is expected to continue at an exponential rate, bringing the bottom line up to €75m by 2022.
While it is helpful to be aware of the growth rate each year relative to today’s figure, it may be more beneficial estimating the rate at which the earnings are rising or falling on average every year. The benefit of this method is that it removes the impact of near term flucuations and accounts for the overarching direction of Pharming Group's earnings trajectory over time, which may be more relevant for long term investors. To compute 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 35%. This means, we can presume Pharming Group will grow its earnings by 35% every year for the next couple of years.
For Pharming Group, 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 PHARM 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 PHARM is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of PHARM? 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.