In December 2018, GenMark Diagnostics, Inc. (NASDAQ:GNMK) announced its most recent earnings update, which suggested company earnings became less negative compared to the previous year’s level – great news for investors Investors may find it useful to understand how market analysts view GenMark Diagnostics’s earnings growth trajectory over the next few 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.
Analysts’ expectations for the upcoming year seems positive, with earnings becoming less negative, arriving at -US$43.8m in 2020. However, earnings are predicted to fall off in the following year, reducing to -US$29.4m in 2021 and -US$21.8m in 2022.
Even though it is useful to be aware of the growth rate year by year relative to today’s value, it may be more beneficial gauging the rate at which the company is moving on average every year. The benefit of this method is that it ignores near term flucuations and accounts for the overarching direction of GenMark Diagnostics’s earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I put 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 46%. This means, we can presume GenMark Diagnostics will grow its earnings by 46% every year for the next few years.
For GenMark Diagnostics, I’ve compiled three important factors you should further examine:
- 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 GNMK 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 GNMK is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of GNMK? 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.