Forterra plc’s (LSE:FORT) released its most recent earnings update in June 2017, which confirmed that the business experienced a sizeable tailwind, leading to a high double-digit earnings growth of 52.78%. Below, I’ve laid out key numbers on how market analysts predict Forterra’s earnings growth outlook 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 Forterra
Analysts’ expectations for this coming year seems positive, with earnings growing by a robust 13.44%. This growth seems to continue into the following year with rates arriving at double digit 24.30% compared to today’s earnings, and finally hitting £58.9M by 2020.
Although it’s useful to understand the growth year by year relative to today’s value, it may be more insightful to evaluate the rate at which the company is growing every year, on average. The pro of this method is that we can get a bigger picture of the direction of Forterra’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 put a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 9.12%. This means that, we can anticipate Forterra will grow its earnings by 9.12% every year for the next few years.
Next Steps:
For Forterra, I’ve put together three important aspects you should further examine:
1. 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.
2. Valuation: What is FORT 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 FORT is currently mispriced by the market.
3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of FORT? 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 pass 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.