In December 2018, Exact Sciences Corporation (NASDAQ:EXAS) announced its latest earnings update, which showed company earnings became less negative compared to the previous year’s level as a result of recent tailwinds Below, I’ve laid out key numbers on how market analysts perceive Exact Sciences’s earnings growth trajectory over the next few 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.
Analysts’ outlook for next year seems pessimistic, with earnings becoming even more negative, reaching -US$251.6m in 2020. Furthermore, earnings are expected to fall off in the following year, declining to -US$118.4m in 2021 and -US$6.7m in 2022.
Although it’s helpful to understand the growth each year relative to today’s figure, it may be more beneficial to determine the rate at which the business is growing on average every year. The pro of this method is that we can get a better picture of the direction of Exact Sciences’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’ve appended 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 32%. This means, we can expect Exact Sciences will grow its earnings by 32% every year for the next few years.
For Exact Sciences, I’ve compiled three essential aspects you should further research:
- 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 EXAS 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 EXAS is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of EXAS? 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 firstname.lastname@example.org. 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.