Hill & Smith Holdings PLC (LON:HILS): Will The Growth Last?

In June 2018, Hill & Smith Holdings PLC (LON:HILS) announced its earnings update. Overall, the consensus outlook from analysts appear somewhat bearish, as a 12% rise in profits is expected in the upcoming year, compared with the higher past 5-year average growth rate of 20%. Currently with trailing-twelve-month earnings of UK£54m, we can expect this to reach UK£61m by 2019. I will provide a brief commentary around the figures and analyst expectations in the near term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.

Check out our latest analysis for Hill & Smith Holdings

Exciting times ahead?

Longer term expectations from the 6 analysts covering HILS’s stock is one of positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. I’ve plotted out each year’s earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of HILS’s earnings growth over these next few years.

LSE:HILS Future Profit December 18th 18
LSE:HILS Future Profit December 18th 18

By 2021, HILS’s earnings should reach UK£68m, from current levels of UK£54m, resulting in an annual growth rate of 7.3%. This leads to an EPS of £0.78 in the final year of projections relative to the current EPS of £0.69. Margins are currently sitting at 9.2%, which is expected to expand to 10% by 2021.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For Hill & Smith Holdings, I’ve compiled three important aspects you should further research:

  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 Hill & Smith Holdings 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 Hill & Smith Holdings is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Hill & Smith Holdings? 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 editorial-team@simplywallst.com.