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Alkem Laboratories Limited's (NSE:ALKEM) latest earnings announcement in May 2019 indicated that the company experienced a robust tailwind, leading to a double-digit earnings growth of 21%. Below, I've presented key growth figures on how market analysts predict Alkem Laboratories's earnings growth outlook over the next couple of 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.
View our latest analysis for Alkem Laboratories
Market analysts' consensus outlook for next year seems optimistic, with earnings increasing by a robust 25%. This growth seems to continue into the following year with rates reaching double digit 56% compared to today’s earnings, and finally hitting ₹12b by 2022.
Even though it is helpful to understand the growth rate each year relative to today’s value, it may be more valuable gauging the rate at which the company is rising or falling on average every year. The advantage of this approach is that it ignores near term flucuations and accounts for the overarching direction of Alkem Laboratories's earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I've inserted 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 19%. This means that, we can anticipate Alkem Laboratories will grow its earnings by 19% every year for the next few years.
Next Steps:
For Alkem Laboratories, I've compiled three fundamental aspects you should look at:
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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.
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Valuation: What is ALKEM 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 ALKEM is currently mispriced by the market.
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Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ALKEM? 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.