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As HD Supply Holdings, Inc. (NASDAQ:HDS) announced its earnings release on 05 May 2019, it seems that analyst forecasts are fairly optimistic, with earnings expected to grow by 24% in the upcoming year against the past 5-year average growth rate of 9.5%. Presently, with latest-twelve-month earnings at US$391m, we should see this growing to US$487m by 2020. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for HD Supply Holdings in the longer term. 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 16 analysts covering HDS 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 HDS’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.
This results in an annual growth rate of 12% based on the most recent earnings level of US$391m to the final forecast of US$600m by 2022. EPS reaches $3.69 in the final year of forecast compared to the current $2.16 EPS today. With a current profit margin of 6.5%, this movement will result in a margin of 8.7% by 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For HD Supply Holdings, I’ve compiled three key factors you should look at:
- 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 HD Supply Holdings 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 HD Supply Holdings is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of HD Supply Holdings? 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.