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L&T Technology Services Limited’s (NSE:LTTS) announced its latest earnings update in June 2019, which indicated that the business benefited from a sizeable tailwind, leading to a high double-digit earnings growth of 51%. Below, I’ve laid out key numbers on how market analysts predict L&T Technology Services’s earnings growth trajectory over the next few years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
Analysts’ outlook for the coming year seems rather muted, with earnings increasing by a single digit 6.9%. The growth outlook in the following year seems much more optimistic with rates arriving at double digit 23% compared to today’s earnings, and finally hitting ₹10b by 2022.
Even though it is informative knowing the growth each year relative to today’s level, it may be more valuable to analyze the rate at which the business is rising or falling every year, on average. The benefit of this technique is that it ignores near term flucuations and accounts for the overarching direction of L&T Technology Services’s earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I put 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 11%. This means, we can presume L&T Technology Services will grow its earnings by 11% every year for the next couple of years.
For L&T Technology Services, I’ve compiled three key aspects you should look at:
- 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 LTTS 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 LTTS is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of LTTS? 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 firstname.lastname@example.org. 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.