Earnings Per Share (EPS) growth is one measure of a company’s profitability. Since it is often the most commonly discussed performance metric, it tends to drive share prices. In order it improve EPS, companies focus on organic and inorganic growth opportunities available to them.
This article contains analysis of three companies expecting EPS growth of more than 25% in next five years due to various strategies. Let’s find out how these strategies will drive investor interest in each company.
| Company | EPS (Next 5 years) |
|---|---|
| Gilead Sciences (NASDAQ:GILD) | 26.19% |
| Siemens Aktiengesellschaft | 64.80% |
| Amazon.com (NASDAQ:AMZN) | 37.15% |
Source: finviz.com
New drugs will drive future revenue
Gilead Sciences, Inc. (NASDAQ:GILD) has successfully completed research and development of its potential blockbuster drug “Sofosbuvir”. It’s an oral medication used for the treatment of Hepatitis C. According to WHO, around 3% of the world’s population, or 203.2 million, suffer from the Hepatitis C Virus, or HCV. In Europe nearly 5 million people are suffering from HCV. The European Medicines Agency granted the marketing of “sofosbuvir” in all 27 European Union countries, and it will be available in 2014.
The company is also working on the FDA approval of Sofosbuvir. In the U.S., around 3.2 million carry HCV. The approval news of this drug will create a substantial opportunity for Gilead Sciences, Inc. (NASDAQ:GILD).
Additionally, in August 2012 the company received FDA approval to sell its new combo HIV drug “Stribild.” Stribild has contributed $92.1 million in the first quarter 2013 and rose by 130.3%, quarter-over-quarter. In the U.S. around 1.2 million people are suffering from HIV and around 50,000 people become infected each year.
In May 2013 Gilead Sciences, Inc. (NASDAQ:GILD) also received approval for the sale of Stribild from the European Committee. The European approval for HCV and HIV drugs will enhance the company’s total revenue by 10.8% to $10.75 billion in 2013, and $12.58 billion by 2014 compared to $9.7 billion last year.
Strong future growth opportunities
Siemens AG (NYSE:SI) has been working in Brazil for 140 years and generated revenue of around $2.62 billion in the fiscal year 2012. It has recently received a contract of around $1.31 billion from the Brazilian government for infrastructure solutions. In this contract, Siemens will provide technological solutions for building the world’s greenest stadium, enhancing the transportation facilities, and bolstering energy supply in the country.
Brazil is hosting the Confederations Cup in 2013 and the FIFA World Cup in 2014. The company will also enhance airport capacity so that it can serve the around 40 million passengers who are expected to visit Brazil for FIFA Cup in 2014.
Siemens AG (NYSE:SI) is currently in the process of selling its non-core telecom assets and shifting its focus to turnkey projects in energy, industry, and infrastructure. In April the six-year old joint venture with Nokia Corporation (ADR) (NYSE:NOK) , the Nokia Corporation (ADR) (NYSE:NOK) Siemens Networking, or NSN, expired. Siemens AG (NYSE:SI) held a non-controlling stake of 50% in this venture while Nokia Corporation (ADR) (NYSE:NOK) held the controlling stake. With the end of the venture both the companies have the right to sell their stake through a buyout or public offerings. The companies have started searching for buyers for their stake in NSN. If NSN goes through a public offerings it expects to generates cash of $9.17 billion which will help Siemens AG (NYSE:SI) grow its main business.
