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Will Adyen N.V.'s (AMS:ADYEN) Earnings Grow In The Years Ahead?

The most recent earnings release Adyen N.V.'s (AMS:ADYEN) announced in March 2019 revealed that the company gained from a strong tailwind, eventuating to a high double-digit earnings growth of 84%. Today I want to provide a brief commentary on how market analysts predict Adyen's earnings growth outlook over the next couple of years and whether the future looks even brighter than the past. 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 Adyen

Analysts' outlook for the coming year seems buoyant, with earnings expanding by a robust 49%. This growth in earnings is expected to continue at an exponential rate, bringing the bottom line up to €389m by 2022.

ENXTAM:ADYEN Past and Future Earnings, July 31st 2019
ENXTAM:ADYEN Past and Future Earnings, July 31st 2019

While it is helpful to be aware of the growth year by year relative to today’s level, it may be more beneficial evaluating the rate at which the business is rising or falling every year, on average. The pro of this technique is that it ignores near term flucuations and accounts for the overarching direction of Adyen'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%. This means, we can assume Adyen will grow its earnings by 26% every year for the next few years.

Next Steps:

For Adyen, there are three fundamental factors you should look at:

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  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 ADYEN 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 ADYEN is currently mispriced by the market.

  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ADYEN? 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.