Want to participate in a short research study? Help shape the future of investing tools and receive a $20 prize!
Expeditors International of Washington, Inc.’s (NASDAQ:EXPD) announced its latest earnings update in December 2018, which showed that the business experienced a robust tailwind, eventuating to a double-digit earnings growth of 26%. Investors may find it useful to understand how market analysts perceive Expeditors International of Washington’s earnings growth trajectory over the next few years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
Analysts’ outlook for next year seems pessimistic, with earnings declining by -0.4%. But in the following year, there is a complete contrast in performance, with generating double digit 4.7% compared to today’s level and continues to increase to US$705m in 2022.
While it is informative understanding the growth rate year by year relative to today’s level, it may be more valuable to evaluate the rate at which the business is moving on average every year. The pro of this method is that it removes the impact of near term flucuations and accounts for the overarching direction of Expeditors International of Washington’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 3.6%. This means, we can anticipate Expeditors International of Washington will grow its earnings by 3.6% every year for the next couple of years.
For Expeditors International of Washington, I’ve compiled three essential factors 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 EXPD 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 EXPD is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of EXPD? 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 firstname.lastname@example.org. 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.