The most recent earnings update Power Finance Corporation Limited’s (NSE:PFC) released in March 2018 showed that the company gained from a substantial tailwind, more than doubling its earnings from the prior year. Below, I’ve laid out key numbers on how market analysts perceive Power Finance’s earnings growth trajectory 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.
Market analysts’ prospects for this coming year seems pessimistic, with earnings decreasing by a double-digit -14%. However, the next few years seem to illustrate a completely different picture, with expected earnings growth rates reaching double digit 14% compared to today’s level and continues to increase.
Even though it is helpful to understand the growth rate each year relative to today’s figure, it may be more beneficial to estimate the rate at which the company is moving every year, on average. The advantage of this method is that it ignores near term flucuations and accounts for the overarching direction of Power Finance’s earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I’ve inserted a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 6.9%. This means, we can presume Power Finance will grow its earnings by 6.9% every year for the next few years.
For Power Finance, I’ve put together three essential aspects you should further examine:
- 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.
- Valuation: What is PFC 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 PFC is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of PFC? 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 firstname.lastname@example.org.