NewLink Genetics Corporation (NASDAQ:NLNK): Is It A Good Long Term Opportunity?

The latest earnings release NewLink Genetics Corporation’s (NASDAQ:NLNK) announced in December 2018 showed company earnings became less negative compared to the previous year’s level – great news for investors Below is a brief commentary on my key takeaways on how market analysts perceive NewLink Genetics’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.

Check out our latest analysis for NewLink Genetics

Analysts’ outlook for this coming year seems relatively subdued, with earnings continuing to flop around in the negative territory, arriving at -US$48.4m in 2020. Additionally, earnings are predicted to fall further in the following year, before bouncing back up again to -US$54.7m in 2022.

NasdaqGM:NLNK Past and Future Earnings, March 1st 2019
NasdaqGM:NLNK Past and Future Earnings, March 1st 2019

Even though it is helpful to understand the growth year by year relative to today‚Äôs level, it may be more beneficial analyzing the rate at which the business is growing every year, on average. The advantage of this approach is that it ignores near term flucuations and accounts for the overarching direction of NewLink Genetics’s earnings trajectory over time, fluctuate up and down. To calculate this rate, I put 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 1.5%. This means, we can presume NewLink Genetics will grow its earnings by 1.5% every year for the next couple of years.

Next Steps:

For NewLink Genetics, I’ve compiled three fundamental factors 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. Future Earnings: How does NLNK’s growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of NLNK? 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.