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On 31 December 2018, Waters Corporation (NYSE:WAT) released its earnings update. Generally, analysts seem fairly confident, with earnings expected to grow by 7.2% in the upcoming year against the past 5-year average growth rate of -11%. Presently, with latest-twelve-month earnings at US$594m, we should see this growing to US$636m by 2020. Below is a brief commentary on the longer term outlook the market has for Waters. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
Can we expect Waters to keep growing?
The 15 analysts covering WAT view its longer term outlook with a positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To get an idea of the overall earnings growth trend for WAT, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
By 2022, WAT’s earnings should reach US$683m, from current levels of US$594m, resulting in an annual growth rate of 4.5%. This leads to an EPS of $11.43 in the final year of projections relative to the current EPS of $7.71. With a current profit margin of 25%, this movement will result in a margin of 25% by 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For Waters, I’ve put together three pertinent 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 Waters 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 Waters is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Waters? 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 firstname.lastname@example.org.