In March 2018, Tata Consultancy Services Limited (NSEI:TCS) released its most recent earnings announcement, which signalled that the business endured a minor headwind with earnings declining from ₹262.89B to ₹258.26B, a change of -1.76%. Below, I’ve laid out key numbers on how market analysts predict Tata Consultancy Services’s earnings growth trajectory 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. Check out our latest analysis for Tata Consultancy Services

Analysts’ expectations for the upcoming year seems buoyant, with earnings climbing by a robust 11.81%. This growth seems to continue into the following year with rates arriving at double digit 23.72% compared to today’s earnings, and finally hitting ₹357.23B by 2021.

Although it is helpful to understand the rate of growth each year relative to today’s value, it may be more insightful analyzing the rate at which the earnings are growing on average every year. The pro of this approach is that it ignores near term flucuations and accounts for the overarching direction of Tata Consultancy Services’s earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I’ve appended 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 10.53%. This means, we can presume Tata Consultancy Services will grow its earnings by 10.53% every year for the next few years.

Next Steps:

For Tata Consultancy Services, there are three key factors 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 TCS 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 TCS is currently mispriced by the market.

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