What Should Investors Know About Xenon Pharmaceuticals Inc.’s (NASDAQ:XENE) Earnings Trend?

Xenon Pharmaceuticals Inc.’s (NASDAQ:XENE) latest earnings update in December 2018 confirmed that losses became smaller relative to the prior year’s level – great news for investors Below, I’ve laid out key numbers on how market analysts predict Xenon Pharmaceuticals’s earnings growth trajectory over the next few 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.

View our latest analysis for Xenon Pharmaceuticals

Market analysts’ prospects for this coming year seems pessimistic, with earnings becoming even more negative, reaching -US$41.3m in 2020. However, earnings should move into an upward direction, generating -US$44.1m in 2021, before plateauing down to -US$17.6m in 2022.

NasdaqGM:XENE Past and Future Earnings, April 3rd 2019
NasdaqGM:XENE Past and Future Earnings, April 3rd 2019

While it is informative understanding the rate of growth year by year relative to today‚Äôs figure, it may be more beneficial estimating the rate at which the business is growing on average every year. The advantage of this method is that it removes the impact of near term flucuations and accounts for the overarching direction of Xenon Pharmaceuticals’s earnings trajectory over time, fluctuate up and down. To compute this rate, I’ve inserted 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 38%. This means, we can presume Xenon Pharmaceuticals will grow its earnings by 38% every year for the next couple of years.

Next Steps:

For Xenon Pharmaceuticals, I’ve compiled three relevant 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. Future Earnings: How does XENE’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 XENE? 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.