The latest earnings release Beacon Roofing Supply Inc’s (NASDAQ:BECN) announced in September 2018 showed that the company experienced a significant headwind with earnings deteriorating by -28%. Below is a brief commentary on my key takeaways on how market analysts predict Beacon Roofing Supply’s earnings growth trajectory 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.
Analysts’ expectations for this coming year seems positive, with earnings increasing by a robust 32%. This growth seems to continue into the following year with rates reaching double digit 80% compared to today’s earnings, and finally hitting US$227m by 2021.
While it’s useful to understand the growth each year relative to today’s value, it may be more beneficial analyzing the rate at which the earnings are rising or falling on average every year. The advantage of this approach is that it ignores near term flucuations and accounts for the overarching direction of Beacon Roofing Supply’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 the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 27%. This means that, we can expect Beacon Roofing Supply will grow its earnings by 27% every year for the next couple of years.
For Beacon Roofing Supply, there are three relevant aspects 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 BECN 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 BECN is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of BECN? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.