Larsen & Toubro Limited’s (NSE:LT) latest earnings update in March 2018 revealed that the company experienced a robust tailwind, eventuating to a double-digit earnings growth of 21.99%. Below, I’ve presented key growth figures on how market analysts predict Larsen & Toubro’s earnings growth outlook over the next couple of years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings. Check out our latest analysis for Larsen & Toubro

Market analysts’ prospects for the coming year seems optimistic, with earnings increasing by a robust 12.37%. This growth seems to continue into the following year with rates reaching double digit 30.08% compared to today’s earnings, and finally hitting ₹124.49b by 2021.

Although it is useful to be aware of the growth year by year relative to today’s value, it may be more beneficial estimating the rate at which the earnings are moving every year, on average. The benefit of this approach is that it removes the impact of near term flucuations and accounts for the overarching direction of Larsen & Toubro’s earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I’ve appended 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 13.11%. This means, we can expect Larsen & Toubro will grow its earnings by 13.11% every year for the next couple of years.

Next Steps:

For Larsen & Toubro, there are three essential 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 LT 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 LT is currently mispriced by the market.

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