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Evgen Pharma plc's (LON:EVG) announced its latest earnings update in June 2019, which showed company earnings became less negative compared to the previous year's level - great news for investors Below is a brief commentary on my key takeaways on how market analysts view Evgen Pharma's earnings growth outlook 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.
Analysts' outlook for this coming year seems pessimistic, with earnings becoming even more negative, generating -UK£3.0m in 2020. Furthermore, earnings are expected to fall off in the following year, declining to -UK£2.9m in 2021 and -UK£2.7m in 2022.
Although it’s helpful to understand the growth rate each year relative to today’s level, it may be more valuable determining the rate at which the earnings are rising or falling every year, on average. The advantage of this approach is that it ignores 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've inserted 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 -0.5%. This means, we can expect Evgen Pharma will chip away at a rate of -0.5% every year for the next few years.
For Evgen Pharma, there are three essential aspects you should look at:
- 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 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.
- 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 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.