Profound Medical Corp. (TSE:PRN): Will The Growth Last?
The most recent earnings update Profound Medical Corp.'s (TSE:PRN) released in December 2018 confirmed that losses became smaller relative to the prior year's level as a result of recent tailwinds Below is my commentary, albeit very simple and high-level, on how market analysts predict Profound Medical's earnings growth trajectory over the next couple of years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
Check out our latest analysis for Profound Medical
Market analysts' prospects for the upcoming year seems relatively unexciting, with earnings continuing to flop around in the negative territory, arriving at -CA$19.9m in 2020. Moreover, earnings should fall further in the following year, declining to -CA$12.8m in 2021 and -CA$11.1m in 2022.
Even though it’s informative knowing the growth each year relative to today’s value, it may be more beneficial evaluating the rate at which the company is growing every year, on average. The pro of this approach is that it ignores near term flucuations and accounts for the overarching direction of Profound Medical'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 16%. This means, we can presume Profound Medical will grow its earnings by 16% every year for the next few years.
Next Steps:
For Profound Medical, there are three relevant 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.
Future Earnings: How does PRN's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of PRN? 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.
