The latest earnings release DuluxGroup Limited’s (ASX:DLX) announced in September 2017 signalled that the company benefited from a small tailwind, eventuating to a single-digit earnings growth of 9.60%. Below, I’ve laid out key numbers on how market analysts view DuluxGroup’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. View our latest analysis for DuluxGroup

Analysts’ outlook for the upcoming year seems rather muted, with earnings expanding by a single digit 2.78%. The following year doesn’t look much more exciting, though earnings does reach AU$163.32M in 2021.

Even though it’s useful to be aware of the growth rate year by year relative to today’s figure, it may be more beneficial estimating the rate at which the earnings are growing every year, on average. The advantage of this method is that we can get a better picture of the direction of DuluxGroup’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I’ve inserted 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 4.48%. This means that, we can anticipate DuluxGroup will grow its earnings by 4.48% every year for the next couple of years.

Next Steps:

For DuluxGroup, I’ve put together 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 DLX 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 DLX is currently mispriced by the market.

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