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The latest earnings announcement Intuitive Surgical, Inc. ( NASDAQ:ISRG ) released in December 2018 showed that the company experienced a strong tailwind, leading to a high double-digit earnings growth of 68%. Below is a brief commentary on my key takeaways on how market analysts view Intuitive Surgical’s earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
Analysts’ outlook for the upcoming year seems rather subdued, with earnings growing by a single digit 4.4%. The growth outlook in the following year seems much more optimistic with rates arriving at double digit 23% compared to today’s earnings, and finally hitting US$1.6b by 2022.
Although it’s useful to be aware of the rate of growth each year relative to today’s level, it may be more insightful determining the rate at which the earnings are growing every year, on average. The pro of this method is that we can get a better picture of the direction of Intuitive Surgical’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 appended a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 11%. This means, we can presume Intuitive Surgical will grow its earnings by 11% every year for the next few years.
For Intuitive Surgical, there are three important factors you should further research:
- 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 ISRG 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 ISRG is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of ISRG? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org . This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. On rare occasion, data errors may occur. Thank you for reading.