The most recent earnings update ATS Automation Tooling Systems Inc’s (TSE:ATA) released in March 2018 showed that the business experienced a robust tailwind, leading to a double-digit earnings growth of 34.78%. Today I want to provide a brief commentary on how market analysts predict ATS Automation Tooling Systems’s earnings growth outlook over the next few 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’ outlook for this coming year seems positive, with earnings rising by a robust 49.65%. This growth seems to continue into the following year with rates arriving at double digit 79.12% compared to today’s earnings, and finally hitting CA$93.97m by 2021.
While it’s useful to understand the growth each year relative to today’s value, it may be more insightful gauging the rate at which the earnings are growing every year, on average. The pro of this technique is that we can get a better picture of the direction of ATS Automation Tooling Systems’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To compute this rate, I’ve appended 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 17.39%. This means, we can assume ATS Automation Tooling Systems will grow its earnings by 17.39% every year for the next few years.
For ATS Automation Tooling Systems, I’ve put together three relevant 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 ATA 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 ATA is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ATA? 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 email@example.com.