IEC Electronics Corp. (NYSEMKT:IEC): Poised For Long-Term Success?

The most recent earnings announcement IEC Electronics Corp.’s (NYSEMKT:IEC) released in September 2018 indicated that the company experienced a major tailwind, more than doubling its earnings from the prior year. Below is my commentary, albeit very simple and high-level, on how market analysts view IEC Electronics’s earnings growth outlook over the next couple of years and whether the future looks even brighter than the past. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.

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Market analysts’ prospects for the coming year seems pessimistic, with earnings decreasing by a double-digit -43%. However, the following year shows a contrast, with earnings growth becoming positive at 8.5% compared to today’s earnings level. Earnings are then expected to decrease to US$11m in 2022.

AMEX:IEC Future Profit January 31st 19
AMEX:IEC Future Profit January 31st 19

Even though it’s informative understanding the growth year by year relative to today’s value, it may be more insightful to determine the rate at which the company is rising or falling on average every year. The advantage of this technique is that it removes the impact of near term flucuations and accounts for the overarching direction of IEC Electronics’s earnings trajectory over time, fluctuate up and down. To compute this rate, I’ve inserted a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 4.0%. This means that, we can assume IEC Electronics will grow its earnings by 4.0% every year for the next couple of years.

Next Steps:

For IEC Electronics, there are three important factors you should look at:

  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 IEC 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 IEC is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of IEC? 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.