Will Synopsys Inc’s (NASDAQ:SNPS) Earnings Grow Over The Next Few Years?
In October 2017, Synopsys Inc (NASDAQ:SNPS) released its latest earnings announcement, which showed that the business experienced a major headwind with earnings declining by -48.82%. Below, I’ve laid out key numbers on how market analysts perceive Synopsys’s earnings growth outlook over the next couple of years and whether the future looks brighter. 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. See our latest analysis for Synopsys
Analysts’ outlook for next year seems buoyant, with earnings growth more than doubling. Earnings continue to grow strongly in the next couple of years, finally generating $490.0M in 2021.
Although it’s helpful to understand the rate of growth year by year relative to today’s level, it may be more valuable to estimate the rate at which the earnings are moving on average every year. The pro of this method is that it removes the impact of near term flucuations and accounts for the overarching direction of Synopsys’s earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I’ve appended a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 26.93%. This means, we can expect Synopsys will grow its earnings by 26.93% every year for the next few years.
Next Steps:
For Synopsys, there are three relevant 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 SNPS 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 SNPS is currently mispriced by the market.
3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of SNPS? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
