The most recent earnings update Hikma Pharmaceuticals PLC’s (LSE:HIK) released in June 2017 signalled that the company endured a significant headwind with earnings declining by -38.49%. Below, I’ve laid out key numbers on how market analysts predict Hikma Pharmaceuticals’s earnings growth outlook over the next couple of years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in. See our latest analysis for Hikma Pharmaceuticals
Analysts’ outlook for this coming year seems rather muted, with earnings climbing by a single digit 4.63%. The growth outlook in the following year seems much more positive with rates arriving at double digit 20.74% compared to today’s earnings, and finally hitting $233.9M by 2020.
While it’s useful to be aware of the growth each year relative to today’s level, it may be more insightful evaluating the rate at which the company is growing on average every year. The pro of this technique is that it removes the impact of near term flucuations and accounts for the overarching direction of Hikma Pharmaceuticals’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 13.17%. This means, we can anticipate Hikma Pharmaceuticals will grow its earnings by 13.17% every year for the next couple of years.
Next Steps:
For Hikma Pharmaceuticals, there are three important factors 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. Valuation: What is HIK 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 HIK is currently mispriced by the market.
3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of HIK? 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.