Radius Health, Inc.'s (NASDAQ:RDUS) most recent earnings announcement in December 2018 showed that losses became smaller relative to the prior year's level as a result of recent tailwinds Below is a brief commentary on my key takeaways on how market analysts perceive Radius Health's earnings growth trajectory over the next couple of years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
See our latest analysis for Radius Health
Analysts' expectations for this coming year seems positive, with earnings becoming less negative, generating -US$153.3m in 2020. However, earnings are predicted to fall off in the following year, before bouncing back up again to -US$135.9m in 2022.
Although it is useful to be aware of the growth year by year relative to today’s value, it may be more valuable to analyze the rate at which the business is growing every year, on average. The advantage of this technique is that we can get a better picture of the direction of Radius Health's earnings trajectory over the long run, irrespective of near term fluctuations, be more volatile. To compute this rate, I've appended 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 34%. This means that, we can presume Radius Health will grow its earnings by 34% every year for the next few years.
Next Steps:
For Radius Health, there are three important factors 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 RDUS 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 RDUS is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of RDUS? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
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