Looking at IPH Limited’s (ASX:IPH) earnings update in June 2018, the consensus outlook from analysts appear fairly confident, with earnings expected to grow by 38% in the upcoming year against the past 5-year average growth rate of 11%. By 2019, we can expect IPH’s bottom line to reach AU$56m, a jump from the current trailing-twelve-month AU$41m. Below is a brief commentary around IPH’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 IPH

Exciting times ahead?

Longer term expectations from the 6 analysts covering IPH’s stock is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To reduce the year-on-year volatility of analyst earnings forecast, I’ve inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.

By 2021, IPH’s earnings should reach AU$65m, from current levels of AU$41m, resulting in an annual growth rate of 14%. This leads to an EPS of A$0.35 in the final year of projections relative to the current EPS of A$0.21. With a current profit margin of 18%, this movement will result in a margin of 23% by 2021.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For IPH, I’ve compiled three fundamental factors 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 IPH 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 IPH is currently mispriced by the market.

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