In December 2017, Insmed Incorporated (NASDAQ:INSM) announced its latest earnings update, which indicated company earnings became less negative compared to the previous year’s level – great news for investors Below is my commentary, albeit very simple and high-level, on how market analysts predict Insmed’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. See our latest analysis for Insmed

Analysts’ expectations for this coming year seems pessimistic, with earnings becoming even more negative, arriving at -US$300.95M in 2019. However, earnings should move into an upward trajectory, arriving at -US$220.75M in 2020, and -US$67.83M in 2021.

While it is useful to be aware of the growth rate each year relative to today’s figure, it may be more valuable gauging the rate at which the business is rising or falling 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 Insmed’s earnings trajectory over time, which may be more relevant for long term investors. To compute 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 41.72%. This means that, we can assume Insmed will grow its earnings by 41.72% every year for the next few years.

Next Steps:

For Insmed, I’ve compiled three pertinent 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. Future Earnings: How does INSM’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 INSM? 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.