Will Kingspan Group plc’s (ISE:KRX) Earnings Grow In The Years Ahead?

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Kingspan Group plc’s (ISE:KRX) most recent earnings update in March 2019 revealed that the business benefited from a robust tailwind, leading to a double-digit earnings growth of 16%. Investors may find it useful to understand how market analysts predict Kingspan Group’s earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.

See our latest analysis for Kingspan Group

Market analysts’ prospects for the upcoming year seems positive, with earnings increasing by a robust 11%. This growth seems to continue into the following year with rates reaching double digit 20% compared to today’s earnings, and finally hitting €426m by 2022.

ISE:KRX Past and Future Earnings, July 11th 2019
ISE:KRX Past and Future Earnings, July 11th 2019

While it’s useful to be aware of the growth rate each year relative to today’s level, it may be more insightful analyzing the rate at which the company is rising or falling every year, on average. The benefit of this approach is that it removes the impact of near term flucuations and accounts for the overarching direction of Kingspan Group’s earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I’ve inserted 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 8.0%. This means, we can expect Kingspan Group will grow its earnings by 8.0% every year for the next couple of years.

Next Steps:

For Kingspan Group, there are three key factors you should look at:

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