What Should Investors Know About Sogou Inc.’s (NYSE:SOGO) Earnings Trajectory?

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The most recent earnings release Sogou Inc.’s (NYSE:SOGO) announced in March 2019 signalled that the company gained from a large tailwind, eventuating to a high double-digit earnings growth of 71%. Below, I’ve presented key growth figures on how market analysts predict Sogou’s earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.

See our latest analysis for Sogou

Analysts’ outlook for this coming year seems positive, with earnings rising by a robust 10%. This growth seems to continue into the following year with rates arriving at double digit 32% compared to today’s earnings, and finally hitting US$135m by 2022.

NYSE:SOGO Past and Future Earnings, May 3rd 2019
NYSE:SOGO Past and Future Earnings, May 3rd 2019

Even though it’s helpful to understand the growth rate year by year relative to today’s level, it may be more beneficial estimating the rate at which the earnings are growing every year, on average. The benefit of this approach is that it removes the impact of near term flucuations and accounts for the overarching direction of Sogou’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 22%. This means, we can anticipate Sogou will grow its earnings by 22% every year for the next couple of years.

Next Steps:

For Sogou, I’ve compiled three relevant aspects you should further examine:

  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 SOGO 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 SOGO is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of SOGO? 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.