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The latest earnings announcement Hindalco Industries Limited (NSE:HINDALCO) released in May 2019 revealed that the company endured a minor headwind with earnings deteriorating from ₹61b to ₹55b, a change of -9.7%. Below, I've laid out key numbers on how market analysts view Hindalco Industries's earnings growth outlook over the next couple of years and whether the future looks brighter. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
See our latest analysis for Hindalco Industries
Analysts' outlook for the upcoming year seems pessimistic, with earnings reducing by -3.2%. But in the following year, there is a complete contrast in performance, with generating double digit 1.8% compared to today’s level and continues to increase to ₹62b in 2022.
Even though it is useful to understand the growth rate year by year relative to today’s figure, it may be more insightful analyzing the rate at which the business is rising or falling on average every year. The pro of this approach is that we can get a better picture of the direction of Hindalco Industries'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 appended 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 1.6%. This means, we can presume Hindalco Industries will grow its earnings by 1.6% every year for the next few years.
Next Steps:
For Hindalco Industries, I've compiled three key factors you should look at:
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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 HINDALCO 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 HINDALCO 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 HINDALCO? 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.