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Intact Financial Corporation’s (TSE:IFC) announced its latest earnings update in December 2018, which showed that the company faced a significant headwind with earnings deteriorating by -13%. Below is my commentary, albeit very simple and high-level, on how market analysts predict Intact Financial’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.
Analysts’ outlook for the upcoming year seems positive, with earnings rising by a robust 44%. This growth seems to continue into the following year with rates arriving at double digit 55% compared to today’s earnings, and finally hitting CA$1.1b by 2022.
Although it is useful to be aware of the growth rate year by year relative to today’s level, it may be more beneficial to gauge the rate at which the earnings are moving on average every year. The benefit of this technique is that we can get a better picture of the direction of Intact Financial’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 analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 17%. This means that, we can anticipate Intact Financial will grow its earnings by 17% every year for the next few years.
For Intact Financial, I’ve put together three key 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 IFC 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 IFC is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of IFC? 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.