Markel Corporation (NYSE:MKL) is predicted to grow its earnings per share by a relatively small 3.41% over the next three years. With the recent EPS being $29.01, expected growth will push next year’s upcoming EPS to around $30. A positive earnings growth may please investors on the surface, but it’s important to compare this expectation to MKL’s track record. This will give investors context, whether the growth prospect is justified and bolstered by past trends. I am going to look at the latest data on MKL to assess whether this expected growth is reasonable. View our latest analysis for Markel
What can we expect from MKL in the future?
Based on analysts estimates MKL’s earnings are to grow 3.4% over the next 3 years. This would see the EPS rise to $30 which would no doubt please investors who are used to an average of $31.99 over the past few years. During the same time revenue is predicted to grow from $5.75 Billion to $5.88 Billion in 2019 and profits (net income) are predicted to reduce slightly from $436 Million to $420 Million in 2019. Margins are expected to be rather acceptable at 7.15%.
Is this similar growth to the past?
The past can be an insightful indicator for future performance for a stock. We can determine whether this level of expected growth is illustrative of future headwinds or whether the company continues to grapple with higher growth. The company delivered a growth rate of 7.14% over the past couple of years, which is revealing of their continued performance and value creation to current shareholders. This trend gives us conviction in analysts’ expectations as MKL has already illustrated their ability to grow at this rate.
MKL’s future could look better, given its robust performance in the past few years. However, future headwinds may cause difficulties sustaining high earnings growth. But in order to properly assess the opportunity here, we also need to evaluate whether the stock has been over-penalized by the relatively negative sentiment. If the market views the situation worse than it actually is, excessive discounting could make the stock an attractive investment. Is MKL an undervalued gem? Let’s find out in this free analysis report. If you are not interested in MKL anymore, you can use our free platform to see my list of over 150 other stocks with a high growth potential.