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Looking at Visteon Corporation’s (NASDAQ:VC) recent earnings update on 31 March 2019, the consensus outlook from analysts appear pessimistic, as a 2.4% fall in profits is expected in the upcoming year. Though this is still an improvement on its past 5-year earnings growth rate of -12%, on average. With trailing-twelve-month net income at current levels of US$163m, the consensus growth rate suggests that earnings will decline to US$159m by 2020. Below is a brief commentary around Visteon’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.
Exciting times ahead?
The longer term view from the 15 analysts covering VC is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To understand the overall trajectory of VC’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
From the current net income level of US$163m and the final forecast of US$365m by 2022, the annual rate of growth for VC’s earnings is 30%. This leads to an EPS of $10.85 in the final year of projections relative to the current EPS of $5.53. Margins are currently sitting at 5.5%, which is expected to expand to 8.9% by 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For Visteon, there are three essential 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 Visteon 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 Visteon is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Visteon? 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.