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TeamLease Services Limited’s (NSE:TEAMLEASE) most recent earnings announcement in May 2019 indicated that the company benefited from a robust tailwind, leading to a double-digit earnings growth of 33%. Investors may find it useful to understand how market analysts predict TeamLease Services’s earnings growth outlook over the next couple of 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.
Market analysts’ prospects for the coming year seems optimistic, with earnings growing by a robust 34%. This growth seems to continue into the following year with rates reaching double digit 74% compared to today’s earnings, and finally hitting ₹2.3b by 2022.
Although it’s useful to understand the growth year by year relative to today’s level, it may be more insightful evaluating the rate at which the earnings are moving every year, on average. The benefit of this method is that it removes the impact of near term flucuations and accounts for the overarching direction of TeamLease Services’s earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I’ve appended 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 25%. This means, we can assume TeamLease Services will grow its earnings by 25% every year for the next few years.
For TeamLease Services, I’ve compiled three relevant 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 TEAMLEASE 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 TEAMLEASE is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of TEAMLEASE? 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 email@example.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.