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In March 2019, Larsen & Toubro Limited (NSE:LT) announced its latest earnings update, which signalled that the company experienced a strong tailwind, leading to a double-digit earnings growth of 21%. Below, I've laid out key numbers on how market analysts perceive Larsen & Toubro's earnings growth trajectory over the next few years and whether the future looks even brighter than the past. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.

Check out our latest analysis for Larsen & Toubro

Market analysts' prospects for the coming year seems positive, with earnings increasing by a robust 14%. This growth seems to continue into the following year with rates reaching double digit 33% compared to today’s earnings, and finally hitting ₹131b by 2022.

While it is informative understanding the growth each year relative to today’s figure, it may be more valuable evaluating the rate at which the earnings are growing on average every year. The pro of this method is that we can get a bigger picture of the direction of Larsen & Toubro'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 the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 13%. This means, we can assume Larsen & Toubro will grow its earnings by 13% every year for the next couple of years.

Next Steps:

For Larsen & Toubro, there are three pertinent aspects 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 LT 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 LT is currently mispriced by the market.

3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of LT? 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 editorial-team@simplywallst.com. 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. Thank you for reading.