The most recent earnings release Invuity Inc’s (NASDAQ:IVTY) announced in September 2017 suggested 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 perceive Invuity’s earnings growth outlook over the next couple of years and whether the future looks brighter. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings. See our latest analysis for Invuity
Analysts’ expectations for next year seems positive, with earnings becoming less negative, arriving at $-35.0M in 2019. Furthermore, earnings should continue its upward direction, generating $-29.3M in 2020, and $-17.8M in 2021.
Even though it is informative understanding the rate of growth year by year relative to today’s value, it may be more valuable to determine the rate at which the earnings are growing every year, on average. The benefit of this method is that we can get a bigger picture of the direction of Invuity’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’ve inserted 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 26.02%. This means, we can expect Invuity will grow its earnings by 26.02% every year for the next few years.
Next Steps:
For Invuity, there are three important factors you should further examine:
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. Management:Have insiders been ramping up their shares to take advantage of the market’s sentiment for IVTY’s future outlook? Check out our management and board analysis with insights on CEO compensation and governance factors.
3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of IVTY? 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.