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The most recent earnings release Wipro Limited's (NSE:WIPRO) announced in June 2019 revealed that the company experienced a robust tailwind, eventuating to a double-digit earnings growth of 12%. Below, I've laid out key numbers on how market analysts perceive Wipro'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.
Check out our latest analysis for Wipro
Market analysts' consensus outlook for next year seems rather muted, with earnings expanding by a single digit 9.1%. The growth outlook in the following year seems much more buoyant with rates reaching double digit 15% compared to today’s earnings, and finally hitting ₹110b by 2022.
Although it’s informative knowing the growth year by year relative to today’s level, it may be more insightful analyzing the rate at which the business is moving on average every year. The advantage of this method is that we can get a better picture of the direction of Wipro's earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To compute 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 6.7%. This means, we can assume Wipro will grow its earnings by 6.7% every year for the next couple of years.
Next Steps:
For Wipro, there are three relevant factors you should further examine:
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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 WIPRO 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 WIPRO 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 WIPRO? 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.