In March 2019, Magma Fincorp Limited (NSE:MAGMA) released its most recent earnings announcement, which showed that the business experienced a robust tailwind, leading to a double-digit earnings growth of 32%. Below, I've laid out key numbers on how market analysts perceive Magma Fincorp's earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.

Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!

View our latest analysis for Magma Fincorp

Market analysts' prospects for the coming year seems rather muted, with earnings climbing by a single digit 3.2%. The growth outlook in the following year seems much more buoyant with rates reaching double digit 30% compared to today’s earnings, and finally hitting ₹5.1b by 2022.

While it’s informative understanding the growth rate each year relative to today’s figure, it may be more valuable 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 Magma Fincorp'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 put 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%. This means, we can anticipate Magma Fincorp will grow its earnings by 15% every year for the next couple of years.

Next Steps:

For Magma Fincorp, I've compiled three essential aspects you should look at:

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 MAGMA 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 MAGMA is currently mispriced by the market.

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