Vanda Pharmaceuticals Inc. (NASDAQ:VNDA): Will The Growth Last?

Vanda Pharmaceuticals Inc.’s (NASDAQ:VNDA) most recent earnings update in December 2018 suggested that the company finally turned profitable after delivering negative earnings on average over the past few years. Below, I’ve presented key growth figures on how market analysts predict Vanda Pharmaceuticals’s earnings growth trajectory 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.

See our latest analysis for Vanda Pharmaceuticals

Analysts’ outlook for the upcoming year seems positive, with earnings growing by a robust 11%. Earnings are predicted to peak in the following year, reaching US$63m before falling in 2022

NasdaqGM:VNDA Past and Future Earnings, March 20th 2019
NasdaqGM:VNDA Past and Future Earnings, March 20th 2019

While it is informative knowing the rate of growth each year relative to today’s level, it may be more insightful determining the rate at which the business is moving every year, on average. The pro of this method is that we can get a better picture of the direction of Vanda Pharmaceuticals’s earnings trajectory over the long run, irrespective of near term fluctuations, fluctuate up and down. To compute 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 27%. This means, we can presume Vanda Pharmaceuticals will grow its earnings by 27% every year for the next few years.

Next Steps:

For Vanda Pharmaceuticals, I’ve compiled three key aspects you should further research:

  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. Valuation: What is VNDA 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 VNDA is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of VNDA? 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.