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The latest earnings release ALS Limited’s (ASX:ALQ) announced in May 2019 indicated that the business experienced a major tailwind, more than doubling its earnings from the prior year. Below, I’ve presented key growth figures on how market analysts predict ALS’s earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
Analysts’ expectations for the coming year seems buoyant, with earnings increasing by a robust 16%. This growth seems to continue into the following year with rates arriving at double digit 20% compared to today’s earnings, and finally hitting AU$216m by 2022.
Even though it’s informative knowing the growth each year relative to today’s value, it may be more insightful estimating the rate at which the earnings are moving every year, on average. The advantage of this method is that we can get a better picture of the direction of ALS’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I put 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 4.2%. This means that, we can expect ALS will grow its earnings by 4.2% every year for the next few years.
For ALS, I’ve compiled three essential factors you should look at:
- 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 ALQ 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 ALQ is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ALQ? 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.