What Should You Know About Element Fleet Management Corp's (TSE:EFN) Future?

Element Fleet Management Corp's (TSX:EFN) released its most recent earnings update in December 2017, which suggested that the business faced a significant headwind with earnings deteriorating by -26.69%. Below is a brief commentary on my key takeaways on how market analysts view Element Fleet Management's earnings growth outlook over the next couple of years and whether the future looks brighter. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings. Check out our latest analysis for Element Fleet Management

Analysts' outlook for this coming year seems optimistic, with earnings climbing by a significant 51.41%. Earnings are predicted to shoot up to around CA$233.94M in the following year before plateauing, heading into 2021.

Although it is informative understanding the rate of growth each year relative to today’s figure, it may be more beneficial to determine the rate at which the business is rising or falling every year, on average. The advantage of this technique is that it removes the impact of near term flucuations and accounts for the overarching direction of Element Fleet Management's earnings trajectory over time, be more volatile. To compute this rate, I've inserted 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 26.31%. This means, we can assume Element Fleet Management will grow its earnings by 26.31% every year for the next few years.

Next Steps:

For Element Fleet Management, there are three important factors you should further examine:

1. 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.
2. Valuation: What is EFN 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 EFN is currently mispriced by the market.
3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of EFN? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.