In September 2018, ALS Limited (ASX:ALQ) released its earnings update. Generally, analysts seem cautiously optimistic, as a 23% increase in profits is expected in the upcoming year, against the past 5-year average growth rate of 2.4%. With trailing-twelve-month net income at current levels of AU$66m, we should see this rise to AU$81m in 2020. Below is a brief commentary around ALS’s earnings outlook going forward, which may give you a sense of market sentiment for the company. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
How will ALS perform in the near future?
Longer term expectations from the 10 analysts covering ALQ’s stock is one of positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. 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.
By 2022, ALQ’s earnings should reach AU$89m, from current levels of AU$66m, resulting in an annual growth rate of 5.8%. This leads to an EPS of A$0.43 in the final year of projections relative to the current EPS of A$0.13. With a current profit margin of 4.5%, this movement will result in a margin of 5.3% by 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For ALS, there are three key factors 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 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.