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The most recent earnings release Essentra plc's (LON:ESNT) announced in April 2019 showed that the company benefited from a major tailwind, more than doubling its earnings from the prior year. Below, I've laid out key growth figures on how market analysts perceive Essentra's earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
View our latest analysis for Essentra
Market analysts' prospects for the coming year seems positive, with earnings expanding by a significant 63%. This high growth in earnings is expected to continue, bringing the bottom line up to UK£56m by 2022.
Even though it’s informative understanding the growth rate each year relative to today’s value, it may be more insightful to gauge the rate at which the earnings are moving on average every year. The benefit of this technique is that we can get a better picture of the direction of Essentra's earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I've inserted a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 25%. This means that, we can presume Essentra will grow its earnings by 25% every year for the next few years.
Next Steps:
For Essentra, I've compiled three relevant 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 ESNT 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 ESNT 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 ESNT? 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.