Trifast plc’s (LON:TRI) most recent earnings update in March 2018 revealed that the business experienced a strong tailwind, leading to a double-digit earnings growth of 19%. Investors may find it useful to understand how market analysts predict Trifast’s earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. 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 next year seems pessimistic, with earnings reducing by a double-digit -18%. Over the medium term, earnings will begin to improve, increasing year on year, and generating UK£16m by 2021.
Although it is informative understanding the rate of growth year by year relative to today’s level, it may be more beneficial to evaluate the rate at which the earnings are rising or falling on average every year. The pro of this technique is that we can get a better picture of the direction of Trifast’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 2.1%. This means, we can assume Trifast will grow its earnings by 2.1% every year for the next few years.
For Trifast, I’ve put together three key 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 TRI 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 TRI is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of TRI? 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.