Based on the latest analyst prediction, Brocade Communications Systems Inc (NASDAQ:BRCD) is estimated to optimistically grow its earnings by over 150% next year. With the recent EPS being $0.075, expected growth will push the upcoming EPS to $0.456. To determine whether this growth rate expectation is justified, we should take a look at how the company has been performing in the past. See our latest analysis for BRCD
Exciting times ahead for BRCD
One reason why investors are attracted to BRCD is the high growth potential in the near future. Expectations from 4 analysts are extremely bullish with earnings per share estimated to more than double over the next year. During the same time we will see the revenue increase from $2,341M $2,547M
Is this similar growth to the past?
The past can be an insightful indicator for future performance for a stock. We can determine whether this level of expected growth is sustainable and whether the company continues to go from strength to strength. However, BRCD’s earnings growth last year was negative, at -86.72%. Although its past performance is not supportive of a positive growth trend, it could also mean BRCD is growing off a lower base, meaning a higher growth rate is easier to achieve. This sign change in growth could indicate a turnaround initiative.
Next Steps:
For BRCD, I’ve compiled three pertinent factors 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 BRCD 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 BRCD is currently mispriced by the market.
3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of BRCD? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.