In January 2019, MongoDB, Inc. (NASDAQ:MDB) announced its latest earnings update, which confirmed company earnings became less negative compared to the previous year’s level as a result of recent tailwinds Today I want to provide a brief commentary on how market analysts view MongoDB’s earnings growth outlook 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.
Analysts’ expectations for the upcoming year seems pessimistic, with earnings becoming even more negative, generating -US$110.4m in 2020. In addition, earnings should fall off in the following year, decreasing to -US$108.5m in 2021 and -US$88.0m in 2022.
Even though it’s helpful to be aware of the rate of growth each year relative to today’s value, it may be more valuable determining the rate at which the earnings are rising or falling every year, on average. The benefit of this method is that we can get a bigger picture of the direction of MongoDB’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I put 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 -1.3%. This means that, we can expect MongoDB will chip away at a rate of -1.3% every year for the next few years.
For MongoDB, I’ve compiled three important aspects you should look at:
- 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 MDB 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 MDB is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of MDB? 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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