In March 2018, KNR Constructions Limited (NSE:KNRCON) announced its most recent earnings update, which indicated that the business gained from a significant tailwind, more than doubling its earnings from the prior year. Below, I’ve laid out key numbers on how market analysts view KNR Constructions’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.

Check out our latest analysis for KNR Constructions

Market analysts’ prospects for this coming year seems pessimistic, with earnings decreasing by a double-digit -22%. In the next couple of years, earnings will begin to improve, expanding year on year, and arriving at ₹2.6b by 2021.

Although it is helpful to be aware of the growth year by year relative to today’s figure, it may be more beneficial to estimate the rate at which the business is rising or falling on average every year. The advantage of this method is that it removes the impact of near term flucuations and accounts for the overarching direction of KNR Constructions’s earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I put 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 1.4%. This means that, we can assume KNR Constructions will grow its earnings by 1.4% every year for the next few years.

Next Steps:

For KNR Constructions, there are three important aspects 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 KNRCON 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 KNRCON is currently mispriced by the market.

3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of KNRCON? 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 past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.