Earnings per share, or EPS, is an important metric for investors performs a lot of functions: It helps suggest potential profits on individual shares in a company. Moreover, it also shows the performance of a company in a given timeframe, and annual EPS growth suggests the cash generation capacity of a company.
Here are three companies with annual EPS growth forecast above 25% for five years – but they’ll only perform at their forecasted levels if their fundamentals are ultimately sound.
| Company | 5 year annual EPS growth rate |
|---|---|
| LinkedIn Corp (NYSE:LNKD) | 58.43% |
| BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) | 33.82% |
| ArcelorMittal (ADR) (NYSE:MT) | 32.39% |
Increasing segmental growth
In the first quarter of 2013, LinkedIn Corp (NYSE:LNKD)’s revenue surged to $324.7 million, a growth of 72% year-over-year. The company expects revenue of around $1.44 billion by the end of this year, which was $972.3 million in the previous year. Revenue from its recruiting segment increased by 80%, to $184 million in the first quarter of 2013, and there is an increasing trend of job postings on LinkedIn Corp (NYSE:LNKD) by corporations.
In the previous year, 1.73 million jobs were posted on LinkedIn Corp (NYSE:LNKD), but it is estimated that 2.6 million jobs will be posted in the current year. Looking at the growth opportunity in the recruiting segment, and the current growth in job postings, the company appears to be on track to reach its revenue target for the current year.
There are more than 225 million registered users of LinkedIn Corp (NYSE:LNKD). Total revenue from premium account holders rose to $65.6 million in the first quarter of 2013, up by 73%, year-over-year. Subscription plans for the premium account range from $9.95 to $99.95 per month. To increase premium subscriptions, LinkedIn also added various features for its users like “Who’s viewed your profile”, “Rich media”, and a few others. LinkedIn Corp (NYSE:LNKD)’s projected growth is around 60% for this segment. Also, premium subscription penetration was around 0.45% in the previous year and is expected to grow to 0.56% this year. This will help the company to achieve its projected revenue growth for the current year.
New drugs pipeline
BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) develops, manufactures, and commercializes drugs for rare diseases. The company’s new product pipeline is impressive, as its new drug “Vimzim” recently showed a positive result in Phase 3 trials. Vimzim is used in the treatment of patients suffering from Morquio’s syndrome, a rare, inherited metabolic disease that causes abnormal development of bones, a large head, short trunk, or widely spaced teeth. The company applied for its Biologics License Application to the FDA in March 2013, and the European Committee for Medicinal Products for Human Use is also expected to give it a stamp of approval before the first quarter of next year. Vimzim is expected to launch by April 2014. Once it gets approval, revenue from Vimzim will likely be around $600 million annually.
BioMarin Pharmaceutical Inc. (NASDAQ:BMRN)’s PARP inhibitor program showed positive signs in the treatment of patients suffering from breast cancer and ovarian cancer. The clinical name of this drug is BMN-673, and data from Phase 1 and Phase 2 trials show a response rate of 44% (response rates refer to successful patient treatments.) BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) is now planning for a Phase 3 test of this drug, with a projected completion date of 2015. The company will test this drug on 3,000 patients in the U.S., and will file for FDA approval in 2016. The expected revenue from this drug will be around $600 million annually once it hits the market.
Future looks brighter
ArcelorMittal (ADR) (NYSE:MT)’s revenue fell to $19.75 billion in the first quarter of 2013, a 13% year-over-year decline. However, it is expecting that the current year’s global consumption of steel will exceed last year by 3%. The uptick in consumption this year will largely be driven by increased demand in Brazil, where it will grow by 3%-4%, and China, where it will grow 3.5%-4.5%, year-over-year. Steel industry earnings have been depressed due to the slowdown in the European economy, and the lower growth rate in the Chinese economy in the previous year. However, demand for steel is expected to increase in China, as a result of that country’s substantive infrastructural development. ArcelorMittal (ADR) (NYSE:MT) targeted an EBITDA for the current fiscal year of $7.1 billion.
