Ucar SA's (EPA:ALUCR) most recent earnings update in April 2019 confirmed that the company gained from a small tailwind, leading to a single-digit earnings growth of 4.1%. Below is my commentary, albeit very simple and high-level, on how market analysts predict Ucar's earnings growth trajectory over the next couple of 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.
View our latest analysis for Ucar
Analysts' outlook for next year seems pessimistic, with earnings decreasing by -7.1%. But in the following year, there is a complete contrast in performance, with generating double digit 34% compared to today’s level and continues to increase to €1.6m in 2022.
Even though it’s useful to understand the growth each year relative to today’s figure, it may be more valuable analyzing the rate at which the company is growing every year, on average. The benefit of this method is that we can get a better picture of the direction of Ucar'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 19%. This means, we can anticipate Ucar will grow its earnings by 19% every year for the next few years.
Next Steps:
For Ucar, there are three important aspects 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 ALUCR 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 ALUCR 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 ALUCR? 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.