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The most recent earnings release Amgen Inc.'s (NASDAQ:AMGN) announced in December 2018 showed that the company benefited from a substantial tailwind, more than doubling its earnings from the prior year. Below, I've presented key growth figures on how market analysts view Amgen's earnings growth trajectory over the next few years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
View our latest analysis for Amgen
Market analysts' consensus outlook for this coming year seems pessimistic, with earnings declining by -7.9%. Beyond this, earnings are expected to continue to be below today's level, with a decline of -1.3% in 2021, eventually reaching US$8.3b in 2022.
Even though it’s useful to be aware of the growth rate each year relative to today’s figure, it may be more insightful to estimate the rate at which the earnings are rising or falling every year, on average. The benefit of this approach is that it ignores near term flucuations and accounts for the overarching direction of Amgen's earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I've inserted 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 3.4%. This means, we can presume Amgen will grow its earnings by 3.4% every year for the next few years.
Next Steps:
For Amgen, I've put together three important aspects 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 AMGN 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 AMGN is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of AMGN? 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. On rare occasion, data errors may occur. Thank you for reading.