Analysts’ expectations for the upcoming year seems optimistic, with earnings climbing by a significant 69.50%. This strong growth in earnings is expected to continue, bringing the bottom line up to €25.49M by 2021.
While it is useful to understand the growth year by year relative to today’s figure, it may be more beneficial to determine the rate at which the earnings are rising or falling every year, on average. The pro of this method is that we can get a better picture of the direction of SHW’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate 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 27.80%. This means, we can expect SHW will grow its earnings by 27.80% every year for the next couple of years.
For SHW, I’ve put together three important 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 SW1 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 SW1 is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of SW1? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!