The latest earnings update Max Financial Services Limited (NSE:MFSL) released in March 2018 revealed that the company faced a immense headwind with earnings declining by -25.1%. Below, I’ve laid out key numbers on how market analysts perceive Max Financial Services’s earnings growth outlook over the next few years and whether the future looks brighter. 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 Max Financial Services

Market analysts’ consensus outlook for the coming year seems rather muted, with earnings rising by a single digit 8.1%. The growth outlook in the following year seems much more positive with rates arriving at double digit 70.2% compared to today’s earnings and declines to ₹4.22b by 2021.

While it’s informative knowing the growth rate each year relative to today’s figure, it may be more beneficial gauging the rate at which the earnings are growing every year, on average. The benefit of this technique is that we can get a bigger picture of the direction of Max Financial Services’s earnings trajectory over the long run, irrespective of near term fluctuations, be more volatile. To calculate this rate, I’ve inserted 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 16.9%. This means that, we can anticipate Max Financial Services will grow its earnings by 16.9% every year for the next few years.

Next Steps:

For Max Financial Services, I’ve put together three important 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 MFSL 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 MFSL is currently mispriced by the market.

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