What Are Analysts Saying About Eicher Motors Limited’s (BOM:505200) Earnings Trend?

In March 2018, Eicher Motors Limited (BOM:505200) released its most recent earnings announcement, which confirmed that the company experienced a robust tailwind, eventuating to a double-digit earnings growth of 30.75%. Investors may find it useful to understand how market analysts view Eicher Motors’s earnings growth outlook over the next few years and whether the future looks even brighter than the past. 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 out our latest analysis for Eicher Motors

Analysts’ expectations for the coming year seems buoyant, with earnings increasing by a robust 25.95%. This growth seems to continue into the following year with rates reaching double digit 51.29% compared to today’s earnings, and finally hitting ₹39.01b by 2021.

BSE:505200 Future Profit June 10th 18
BSE:505200 Future Profit June 10th 18

Even though it’s informative knowing the rate of growth year by year relative to today’s figure, it may be more insightful to evaluate the rate at which the company is rising or falling on average every year. The benefit of this method is that it ignores near term flucuations and accounts for the overarching direction of Eicher Motors’s earnings trajectory over time, which may be more relevant for long term investors. To calculate 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 18.57%. This means, we can presume Eicher Motors will grow its earnings by 18.57% every year for the next couple of years.

Next Steps:

For Eicher Motors, there are 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 505200 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 505200 is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of 505200? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!