Endologix, Inc.’s (NASDAQ:ELGX) released its most recent earnings update in December 2018, which suggested company earnings became less negative compared to the previous year’s level – great news for investors Below is my commentary, albeit very simple and high-level, on how market analysts predict Endologix’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.
Market analysts’ prospects for this coming year seems relatively unexciting, with earnings continuing to flop around in the negative territory, generating -US$84.6m in 2020. Additionally, earnings are predicted to fall further in the following year, declining to -US$67.5m in 2021 and -US$53.0m in 2022.
While it is helpful to be aware of the rate of growth year by year relative to today’s value, it may be more valuable estimating the rate at which the earnings are growing every year, on average. The advantage of this method is that we can get a better picture of the direction of Endologix’s earnings trajectory over the long run, irrespective of near term fluctuations, 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 12%. This means that, we can assume Endologix will grow its earnings by 12% every year for the next couple of years.
For Endologix, there are three key factors 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 ELGX’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 ELGX? 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.