Since TVS Motor Company Limited (NSE:TVSMOTOR) released its earnings in March 2018, the consensus outlook from analysts appear somewhat bearish, with earnings expected to grow by 16% in the upcoming year against the higher past 5-year average growth rate of 25%. Presently, with latest-twelve-month earnings at ₹6.5b, we should see this growing to ₹7.6b by 2020. Below is a brief commentary around TVS Motor’s earnings outlook going forward, which may give you a sense of market sentiment for the company. For those interested in more of an analysis of the company, you can research its fundamentals here.
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How will TVS Motor perform in the near future?
The view from 31 analysts over the next three years is one of positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To reduce the year-on-year volatility of analyst earnings forecast, I’ve inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
This results in an annual growth rate of 17% based on the most recent earnings level of ₹6.5b to the final forecast of ₹11b by 2022. This leads to an EPS of ₹22.81 in the final year of projections relative to the current EPS of ₹13.73. In 2022, TVSMOTOR’s profit margin will have expanded from 4.0% to 4.7%.
Future outlook is only one aspect when you’re building an investment case for a stock. For TVS Motor, I’ve put together three important aspects 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 TVS Motor 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 TVS Motor is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of TVS Motor? 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.