The most recent earnings release Pfizer Inc’s (NYSE:PFE) announced in December 2017 suggested that the company gained from a significant tailwind, more than doubling its earnings from the prior year. Investors may find it useful to understand how market analysts predict Pfizer’s earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. 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 Pfizer

Analysts’ expectations for the coming year seems pessimistic, with earnings falling by a double-digit -40.56%. Beyond this, earnings are predicted to continue to be below today’s level, with a decline of -40.95% in 2020, eventually reaching US$12.58B in 2021.

Although it is useful to be aware of the growth each year relative to today’s level, it may be more valuable to evaluate the rate at which the business is growing on average every year. The pro of this technique is that it ignores near term flucuations and accounts for the overarching direction of Pfizer’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 -15.44%. This means, we can assume Pfizer will chip away at a rate of -15.44% every year for the next couple of years.

Next Steps:

For Pfizer, I’ve put together 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. Valuation: What is PFE 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 PFE is currently mispriced by the market.

3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of PFE? 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.