ICICI Prudential Life Insurance Company Limited’s (NSE:ICICIPRULI) most recent earnings announcement in March 2019 confirmed that the business experienced a significant headwind with earnings falling by -40%. Below, I’ve laid out key numbers on how market analysts predict ICICI Prudential Life Insurance’s earnings growth outlook over the next few years and whether the future looks brighter. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
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Market analysts’ consensus outlook for the upcoming year seems optimistic, with earnings rising by a robust 40%. This growth seems to continue into the following year with rates reaching double digit 50% compared to today’s earnings, and finally hitting ₹19b by 2022.
Although it is helpful to be aware of the growth rate each year relative to today’s level, it may be more insightful to estimate the rate at which the company is moving on average every year. The advantage of this method is that we can get a bigger picture of the direction of ICICI Prudential Life Insurance’s earnings trajectory over the long run, irrespective of near term fluctuations, 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 17%. This means, we can anticipate ICICI Prudential Life Insurance will grow its earnings by 17% every year for the next few years.
For ICICI Prudential Life Insurance, I’ve put together three key factors 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 ICICIPRULI 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 ICICIPRULI is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ICICIPRULI? 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.