Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
After Galenica AG's (VTX:GALE) recent earnings announcement in December 2018, analyst consensus outlook seem bearish, with earnings expected to decline by 18% in the upcoming year against the past 5-year average growth rate of 15%. Presently, with latest-twelve-month earnings at CHF148m, we should see this fall to CHF120m by 2020. Below is a brief commentary on the longer term outlook the market has for Galenica. For those interested in more of an analysis of the company, you can research its fundamentals here.
See our latest analysis for Galenica
How is Galenica going to perform in the near future?
The longer term expectations from the 9 analysts of GALE is tilted towards the negative sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To reduce the year-on-year volatility of analyst earnings forecast, I've inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
From the current net income level of CHF148m and the final forecast of CHF126m by 2022, the annual rate of growth for GALE’s earnings is -4.2%. This leads to an EPS of CHF2.66 in the final year of projections relative to the current EPS of CHF3. Fall in earnings appears to be a result of top-line expansion of 1.8%, which is predicted to lag cost growth leading up to 2022. With this high cost growth, margins is expected to contract from 4.7% to 3.8% by the end of 2022.
Next Steps:
Future outlook is only one aspect when you're building an investment case for a stock. For Galenica, I've put together three fundamental aspects you should further research:
-
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.
-
Valuation: What is Galenica 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 Galenica is currently mispriced by the market.
-
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Galenica? 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.