Based on Medidata Solutions Inc’s (NASDAQ:MDSO) earnings update on 30 September 2018, analyst consensus outlook appear cautiously subdued, with earnings expected to grow by 3.0% in the upcoming year compared with the higher past 5-year average growth rate of 38%. By 2019, we can expect Medidata Solutions’s bottom line to reach US$46m, a jump from the current trailing-twelve-month US$44m. I will provide a brief commentary around the figures and analyst expectations in the near term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
Can we expect Medidata Solutions to keep growing?
The longer term view from the 11 analysts covering MDSO is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To get an idea of the overall earnings growth trend for MDSO, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
By 2021, MDSO’s earnings should reach US$72m, from current levels of US$44m, resulting in an annual growth rate of 22%. EPS reaches $1.3 in the final year of forecast compared to the current $0.79 EPS today. The bottom-line growth seems to be caused by cost-cutting initiatives, since top-line is predicted to rise at a slower pace than earnings. With a current profit margin of 8.1%, this movement will result in a margin of 8.5% by 2021.
Future outlook is only one aspect when you’re building an investment case for a stock. For Medidata Solutions, there are 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.
- Valuation: What is Medidata Solutions 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 Medidata Solutions is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Medidata Solutions? 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 past 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. For errors that warrant correction please contact the editor at firstname.lastname@example.org.