Since Datacolor AG (VTX:DCN) released its earnings in September 2018, analysts seem cautiously optimistic, as a 27% increase in profits is expected in the upcoming year, against the past 5-year average growth rate of 9.9%. Currently with trailing-twelve-month earnings of US$4.1m, we can expect this to reach US$5.2m by 2020. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Datacolor in the longer term. For those interested in more of an analysis of the company, you can research its fundamentals here.
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How is Datacolor going to perform in the near future?
The longer term view from the 1 analysts covering DCN is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. I’ve plotted out each year’s earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of DCN’s earnings growth over these next few years.
By 2022, DCN’s earnings should reach US$6.7m, from current levels of US$4.1m, resulting in an annual growth rate of 16%. This leads to an EPS of $41.07 in the final year of projections relative to the current EPS of $25.29. Margins are currently sitting at 5.0%, which is expected to expand to 7.5% by 2022.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For Datacolor, there are three fundamental aspects you should look at:
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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.
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Valuation: What is Datacolor 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 Datacolor is currently mispriced by the market.
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Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Datacolor? 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.