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Based on Escorts Limited's (NSE:ESCORTS) earnings update on 31 March 2019, it seems that analyst expectations are fairly bearish, as a 11% rise in profits is expected in the upcoming year, compared with the higher past 5-year average growth rate of 32%. Presently, with latest-twelve-month earnings at ₹4.8b, we should see this growing to ₹5.3b by 2020. Below is a brief commentary on the longer term outlook the market has for Escorts. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
See our latest analysis for Escorts
Exciting times ahead?
The longer term view from the 8 analysts covering ESCORTS 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 get an idea of the overall earnings growth trend for ESCORTS, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
From the current net income level of ₹4.8b and the final forecast of ₹6.8b by 2022, the annual rate of growth for ESCORTS’s earnings is 12%. This leads to an EPS of ₹76.17 in the final year of projections relative to the current EPS of ₹55.67. Margins are currently sitting at 7.6%, which is expected to expand to 8.1% by 2022.
Next Steps:
Future outlook is only one aspect when you're building an investment case for a stock. For Escorts, I've put together three essential factors you should further research:
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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 Escorts 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 Escorts 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 Escorts? 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 editorial-team@simplywallst.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.