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As Dr. Reddy's Laboratories Limited (NSE:DRREDDY) released its earnings announcement on 31 March 2019, it seems that analyst forecasts are fairly optimistic, as a 14% increase in profits is expected in the upcoming year, relative to the past 5-year average growth rate of -13%. Currently with trailing-twelve-month earnings of ₹19b, we can expect this to reach ₹21b by 2020. Below is a brief commentary around Dr. Reddy's Laboratories's earnings outlook going forward, which may give you a sense of market sentiment for the company. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
See our latest analysis for Dr. Reddy's Laboratories
How is Dr. Reddy's Laboratories going to perform in the near future?
The view from 34 analysts over the next three years is one of positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To understand the overall trajectory of DRREDDY's earnings growth over these next fews years, I've fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
This results in an annual growth rate of 13% based on the most recent earnings level of ₹19b to the final forecast of ₹28b by 2022. EPS reaches ₹166.92 in the final year of forecast compared to the current ₹113.28 EPS today. In 2022, DRREDDY's profit margin will have expanded from 12% to 13%.
Next Steps:
Future outlook is only one aspect when you're building an investment case for a stock. For Dr. Reddy's Laboratories, there are three fundamental factors 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 Dr. Reddy's Laboratories 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 Dr. Reddy's Laboratories 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 Dr. Reddy's Laboratories? 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.