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The latest earnings announcement National Veterinary Care Ltd (ASX:NVL) released in June 2018 suggested that the business gained from a robust tailwind, leading to a double-digit earnings growth of 42%. Investors may find it useful to understand how market analysts perceive National Veterinary Care’s earnings growth outlook over the next few 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 National Veterinary Care

Market analysts’ consensus outlook for the upcoming year seems optimistic, with earnings growing by a robust 36%. This growth seems to continue into the following year with rates arriving at double digit 65% compared to today’s earnings, and finally hitting AU$11m by 2022.

Although it’s informative knowing the rate of growth each year relative to today’s level, it may be more beneficial determining the rate at which the company is growing every year, on average. The pro of this technique is that it removes the impact of near term flucuations and accounts for the overarching direction of National Veterinary Care’s earnings trajectory over time, which may be more relevant for long term investors. To calculate 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 19%. This means, we can presume National Veterinary Care will grow its earnings by 19% every year for the next couple of years.

Next Steps:

For National Veterinary Care, I’ve compiled three relevant aspects you should further examine:

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 NVL 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 NVL is currently mispriced by the market.

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