Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
In December 2018, Echo Global Logistics, Inc. (NASDAQ:ECHO) released its most recent earnings announcement, which signalled that the business gained from a major tailwind, more than doubling its earnings from the prior year. Below is a brief commentary on my key takeaways on how market analysts predict Echo Global Logistics’s earnings growth trajectory 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.
Analysts’ outlook for the upcoming year seems pessimistic, with earnings reducing by -4.5%. But in the following year, there is a complete contrast in performance, with reaching double digit 6.7% compared to today’s level and continues to increase to US$32m in 2022.
Even though it is useful to understand the growth each year relative to today’s level, it may be more valuable determining the rate at which the company is rising or falling every year, on average. The benefit of this technique is that it ignores near term flucuations and accounts for the overarching direction of Echo Global Logistics’s earnings trajectory over time, which may be more relevant for long term investors. 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 3.3%. This means that, we can presume Echo Global Logistics will grow its earnings by 3.3% every year for the next couple of years.
For Echo Global Logistics, I’ve put together three fundamental aspects you should further research:
- 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 ECHO 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 ECHO is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ECHO? 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 email@example.com.