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On 31 December 2018, EPAM Systems, Inc. (NYSE:EPAM) announced its earnings update. Overall, analyst forecasts seem fairly subdued, with profits predicted to rise by 8.7% next year relative to the higher past 5-year average growth rate of 21%. By 2020, we can expect EPAM Systems’s bottom line to reach US$261m, a jump from the current trailing-twelve-month of US$240m. I will provide a brief commentary around the figures and analyst expectations in the near term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
Can we expect EPAM Systems to keep growing?
Longer term expectations from the 16 analysts covering EPAM’s stock is one of 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 understand the overall trajectory of EPAM’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.
By 2022, EPAM’s earnings should reach US$416m, from current levels of US$240m, resulting in an annual growth rate of 15%. EPS reaches $6.7 in the final year of forecast compared to the current $4.48 EPS today. This high rate of growth of revenue squeezes margins, as analysts predict an upcoming margin contraction from the current 13% to 12% by the end of 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For EPAM Systems, there are three essential 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 EPAM Systems 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 EPAM Systems is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of EPAM Systems? 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.