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On 31 March 2019, ALS Limited (ASX:ALQ) announced its earnings update. Overall, analyst forecasts seem fairly subdued, with profits predicted to rise by 18% next year against the higher past 5-year average growth rate of 22%. By 2020, we can expect ALS’s bottom line to reach AU$196m, a jump from the current trailing-twelve-month of AU$167m. I will provide a brief commentary around the figures and analyst expectations in the near term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
Exciting times ahead?
The view from 10 analysts over the next three years is one of positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. 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.
From the current net income level of AU$167m and the final forecast of AU$222m by 2022, the annual rate of growth for ALQ’s earnings is 4.8%. This leads to an EPS of A$0.47 in the final year of projections relative to the current EPS of A$0.34. With a current profit margin of 10%, this movement will result in a margin of 12% by 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For ALS, I’ve put together three important aspects you should further research:
- 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 ALS 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 ALS is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of ALS? 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 firstname.lastname@example.org. 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.