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L&T Finance Holdings Limited's (NSE:L&TFH) latest earnings announcement in March 2019 showed that the business gained from a strong tailwind, eventuating to a high double-digit earnings growth of 63%. Today I want to provide a brief commentary on how market analysts predict L&T Finance Holdings'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.
Check out our latest analysis for L&T Finance Holdings
Analysts' outlook for next year seems buoyant, with earnings rising by a robust 16%. This growth seems to continue into the following year with rates arriving at double digit 39% compared to today’s earnings, and finally hitting ₹36b by 2022.
Even though it is helpful to understand the rate of growth year by year relative to today’s figure, it may be more beneficial to determine the rate at which the business is growing on average every year. The advantage of this approach is that we can get a better picture of the direction of L&T Finance Holdings's earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To compute 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 16%. This means that, we can presume L&T Finance Holdings will grow its earnings by 16% every year for the next few years.
Next Steps:
For L&T Finance Holdings, I've compiled three important factors you should look at:
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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 L&TFH 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 L&TFH 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 L&TFH? 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.