In March 2018, NPT Limited (NZSE:NPT) announced its most recent earnings update, which indicated that the business gained from a small tailwind, leading to a single-digit earnings growth of 0.72%. Investors may find it useful to understand how market analysts view NPT’s earnings growth trajectory 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. See our latest analysis for NPT

Analysts’ outlook for this coming year seems optimistic, with earnings growing by a significant 95.73%. Earnings are predicted to shoot up to around NZ$6.78m in the following year before plateauing, heading into 2021.

Although it is informative understanding the growth each year relative to today’s level, it may be more valuable to determine the rate at which the earnings are growing on average every year. The pro of this technique is that we can get a bigger picture of the direction of NPT’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 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 21.27%. This means that, we can expect NPT will grow its earnings by 21.27% every year for the next couple of years.

Next Steps:

For NPT, I’ve compiled three relevant factors you should further research:

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 NPT 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 NPT is currently mispriced by the market.

3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of NPT? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.