In December 2018, Conformis, Inc. (NASDAQ:CFMS) released its most recent earnings announcement, which showed company earnings became less negative compared to the previous year’s level as a result of recent tailwinds Below is my commentary, albeit very simple and high-level, on how market analysts perceive Conformis’s earnings growth trajectory over the next couple of 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.
Market analysts’ prospects for the upcoming year seems buoyant, with earnings becoming less negative, reaching -US$28.0m in 2020. However, earnings are predicted to fall off in the following year, declining to -US$23.0m in 2021 and -US$14.5m in 2022.
While it is useful to understand the rate of growth each year relative to today’s figure, it may be more insightful to estimate the rate at which the earnings are growing on average every year. The advantage of this approach is that we can get a bigger picture of the direction of Conformis’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate 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 34%. This means that, we can assume Conformis will grow its earnings by 34% every year for the next couple of years.
For Conformis, I’ve put together 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.
- Management:Have insiders been ramping up their shares to take advantage of the market’s sentiment for CFMS’s future outlook? Check out our management and board analysis with insights on CEO compensation and governance factors.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of CFMS? 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 email@example.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.