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Techtronic Industries Company Limited’s (SEHK:669) announced its latest earnings update in December 2017, which signalled that the company benefited from a strong tailwind, eventuating to a double-digit earnings growth of 15.02%. Below is my commentary, albeit very simple and high-level, on how market analysts predict Techtronic Industries’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. View our latest analysis for Techtronic Industries
Analysts’ expectations for the upcoming year seems positive, with earnings rising by a robust 19.10%. This growth seems to continue into the following year with rates reaching double digit 38.45% compared to today’s earnings, and finally hitting US$764.37M by 2021.
While it is useful to be aware of the growth year by year relative to today’s value, it may be more insightful to evaluate the rate at which the earnings are growing on average every year. The advantage of this method is that it removes the impact of near term flucuations and accounts for the overarching direction of Techtronic Industries’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 the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 15.77%. This means that, we can anticipate Techtronic Industries will grow its earnings by 15.77% every year for the next few years.
Next Steps:
For Techtronic Industries, there are three key 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 669 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 669 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 669? 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.