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After CSR Limited’s (ASX:CSR) earnings announcement on 31 March 2019, analyst consensus outlook appear bearish, with earnings expected to decline by 1.5% in the upcoming year relative to the past 5-year average growth rate of 8.5%. With trailing-twelve-month net income at current levels of AU$139m, the consensus growth rate suggests that earnings will decline to AU$137m by 2020. 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.
How is CSR going to perform in the near future?
Longer term expectations from the 11 analysts covering CSR’s stock is one of negative sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To get an idea of the overall earnings growth trend for CSR, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
This results in an annual growth rate of -2.3% based on the most recent earnings level of AU$139m to the final forecast of AU$132m by 2022. This leads to an EPS of A$0.27 in the final year of projections relative to the current EPS of A$0.28. Contraction in the bottom line seems to suggest a falling top-line, with negative growth of -1.4%. By 2022, margins are projected to decline from 6.0% to 5.9% as a result in a faster fall in profits.
Future outlook is only one aspect when you’re building an investment case for a stock. For CSR, there are three important aspects 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 CSR 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 CSR is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of CSR? 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.