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Will Evgen Pharma plc's (LON:EVG) Earnings Grow In The Years Ahead?

Simply Wall St

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Evgen Pharma plc's (LON:EVG) most recent earnings announcement in June 2019 confirmed company earnings became less negative compared to the previous year's level as a result of recent tailwinds Below, I've laid out key growth figures on how market analysts view Evgen Pharma'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 Evgen Pharma

Analysts' expectations for next year seems pessimistic, with earnings becoming even more negative, reaching -UK£3.0m in 2020. In addition, earnings are expected to fall off in the following year, decreasing to -UK£2.9m in 2021 and -UK£2.7m in 2022.

AIM:EVG Past and Future Earnings, June 25th 2019

While it is informative knowing the rate of growth year by year relative to today’s figure, it may be more insightful to estimate the rate at which the company is rising or falling on average every year. The advantage of this technique is that it removes the impact of near term flucuations and accounts for the overarching direction of Evgen Pharma'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 -0.5%. This means that, we can presume Evgen Pharma will chip away at a rate of -0.5% every year for the next few years.

Next Steps:

For Evgen Pharma, there are three fundamental aspects you should look at:

  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. Future Earnings: How does EVG'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.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of EVG? 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.