The most recent earnings update Retrophin, Inc.’s (NASDAQ:RTRX) released in December 2018 signalled 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 view Retrophin’s earnings growth outlook over the next couple of 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.
Market analysts’ prospects for this coming year seems relatively unexciting, with earnings continuing to flop around in the negative territory, generating -US$100.8m in 2020. However, earnings should move into an upward trajectory, reaching -US$117.4m in 2021, before plateauing down to -US$12.6m in 2022.
While it’s helpful to be aware of the rate of growth year by year relative to today’s value, it may be more beneficial to gauge the rate at which the company is moving every year, on average. The advantage of this method is that it ignores near term flucuations and accounts for the overarching direction of Retrophin’s earnings trajectory over time, be more volatile. 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 47%. This means that, we can anticipate Retrophin will grow its earnings by 47% every year for the next couple of years.
For Retrophin, there are three pertinent 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 RTRX 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 RTRX is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of RTRX? 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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