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As Mphasis Limited (NSE:MPHASIS) announced its earnings release on 31 March 2019, analysts seem fairly confident, as a 11% increase in profits is expected in the upcoming year, against the past 5-year average growth rate of 9.5%. Presently, with latest-twelve-month earnings at ₹11b, we should see this growing to ₹12b by 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for Mphasis in the longer term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
View our latest analysis for Mphasis
Exciting times ahead?
The 21 analysts covering MPHASIS view its longer term outlook with a positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To get an idea of the overall earnings growth trend for MPHASIS, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
From the current net income level of ₹11b and the final forecast of ₹15b by 2022, the annual rate of growth for MPHASIS’s earnings is 11%. EPS reaches ₹79.54 in the final year of forecast compared to the current ₹56.05 EPS today. This high rate of growth of revenue squeezes margins, as analysts predict an upcoming margin contraction from the current 14% to 14% by the end of 2022.
Next Steps:
Future outlook is only one aspect when you're building an investment case for a stock. For Mphasis, there are three essential aspects you should further examine:
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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 Mphasis 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 Mphasis 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 Mphasis? 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.