What Should We Expect From HD Supply Holdings, Inc.’s (NASDAQ:HDS) Earnings Over The Next Year?

Looking at HD Supply Holdings, Inc.’s (NASDAQ:HDS) earnings update in October 2018, analysts seem highly optimistic, as a 75% rise in profits is expected in the upcoming year, against the past 5-year average growth rate of 32%. Presently, with latest-twelve-month earnings at US$167m, we should see this growing to US$292m 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. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.

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How is HD Supply Holdings going to perform in the near future?

The longer term view from the 18 analysts covering HDS is one of positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. I’ve plotted out each year’s earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of HDS’s earnings growth over these next few years.

NASDAQGS:HDS Future Profit January 30th 19
NASDAQGS:HDS Future Profit January 30th 19

This results in an annual growth rate of 16% based on the most recent earnings level of US$167m to the final forecast of US$362m by 2022. EPS reaches $3.56 in the final year of forecast compared to the current $0.87 EPS today. In 2022, HDS’s profit margin will have expanded from 3.3% to 5.9%.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For HD Supply Holdings, there are three essential factors you should further research:

  1. 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.
  2. 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.
  3. 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!

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 editorial-team@simplywallst.com.