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In March 2019, Kaiser Aluminum Corporation (NASDAQ:KALU) announced its earnings update. Overall, it seems that analyst forecasts are fairly optimistic, with earnings growth rate expected to be 24% in the upcoming year, relative to the past five-year average earnings growth of 24% per year. With trailing-twelve-month net income at current levels of US$92m, we should see this rise to US$113m in 2020. Below is a brief commentary on the longer term outlook the market has for Kaiser Aluminum. For those interested in more of an analysis of the company, you can research its fundamentals here.
Can we expect Kaiser Aluminum to keep growing?
The longer term view from the 5 analysts covering KALU is one of positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. 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 KALU’s earnings growth over these next few years.
This results in an annual growth rate of 5.6% based on the most recent earnings level of US$92m to the final forecast of US$124m by 2022. EPS reaches $8.25 in the final year of forecast compared to the current $5.53 EPS today. Margins are currently sitting at 5.8%, which is expected to expand to 7.2% by 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For Kaiser Aluminum, there are three key aspects 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 Kaiser Aluminum 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 Kaiser Aluminum is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Kaiser Aluminum? 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.