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Hill & Smith Holdings PLC's (LON:HILS) released its most recent earnings update in December 2018, which confirmed that the business experienced a substantial headwind with earnings declining by -12%. Investors may find it useful to understand how market analysts predict Hill & Smith Holdings's earnings growth outlook over the next couple of years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.

See our latest analysis for Hill & Smith Holdings

Market analysts' consensus outlook for next year seems optimistic, with earnings growing by a robust 30%. This growth seems to continue into the following year with rates arriving at double digit 40% compared to today’s earnings, and finally hitting UK£68m by 2022.

While it’s useful to be aware of the rate of growth year by year relative to today’s figure, it may be more insightful analyzing the rate at which the earnings are rising or falling on average every year. The pro of this approach is that we can get a bigger picture of the direction of Hill & Smith Holdings's earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To compute 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 9.4%. This means, we can expect Hill & Smith Holdings will grow its earnings by 9.4% every year for the next few years.

Next Steps:

For Hill & Smith Holdings, there are three relevant factors you should look at:

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 HILS 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 HILS is currently mispriced by the market.

3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of HILS? 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.