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The most recent earnings update Edelweiss Financial Services Limited’s (NSE:EDELWEISS) released in March 2019 suggested that the company gained from a robust tailwind, leading to a double-digit earnings growth of 13%. Investors may find it useful to understand how market analysts perceive Edelweiss Financial Services’s earnings growth outlook over the next couple of years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
Market analysts’ prospects for the coming year seems rather muted, with earnings increasing by a single digit 5.2%. The growth outlook in the following year seems much more optimistic with rates generating double digit 27% compared to today’s earnings, and finally hitting ₹17b by 2022.
Although it’s useful to be aware of the rate of growth year by year relative to today’s level, it may be more insightful evaluating the rate at which the earnings are growing on average every year. The advantage of this method is that it ignores near term flucuations and accounts for the overarching direction of Edelweiss Financial Services’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 the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 16%. This means that, we can anticipate Edelweiss Financial Services will grow its earnings by 16% every year for the next few years.
For Edelweiss Financial Services, I’ve compiled three fundamental factors you should further research:
- 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 EDELWEISS 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 EDELWEISS is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of EDELWEISS? 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.