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As Timken India Limited (NSE:TIMKEN) released its earnings announcement on 31 March 2019, analyst consensus outlook appear cautiously optimistic, with profits predicted to increase by 23% next year against the past 5-year average growth rate of 13%. By 2020, we can expect Timken India’s bottom line to reach ₹1.8b, a jump from the current trailing-twelve-month of ₹1.5b. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for Timken India in the longer term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
View our latest analysis for Timken India
Exciting times ahead?
The longer term view from the 4 analysts covering TIMKEN is one of positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To reduce the year-on-year volatility of analyst earnings forecast, I've inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
This results in an annual growth rate of 15% based on the most recent earnings level of ₹1.5b to the final forecast of ₹2.5b by 2022. This leads to an EPS of ₹32.88 in the final year of projections relative to the current EPS of ₹19.92. With a current profit margin of 8.9%, this movement will result in a margin of 9.7% by 2022.
Next Steps:
Future outlook is only one aspect when you're building an investment case for a stock. For Timken India, there are three fundamental factors you should further research:
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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 Timken India 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 Timken India 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 Timken India? 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.