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Since SKF India Limited (NSE:SKFINDIA) released its earnings in March 2019, the consensus outlook from analysts appear somewhat bearish, with profits predicted to rise by 11% next year compared with the higher past 5-year average growth rate of 12%. Presently, with latest-twelve-month earnings at ₹3.4b, we should see this growing to ₹3.7b by 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for SKF India in the longer term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
Check out our latest analysis for SKF India
How is SKF India going to perform in the near future?
The longer term expectations from the 8 analysts of SKFINDIA is tilted towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To get an idea of the overall earnings growth trend for SKFINDIA, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
This results in an annual growth rate of 12% based on the most recent earnings level of ₹3.4b to the final forecast of ₹4.9b by 2022. This leads to an EPS of ₹100 in the final year of projections relative to the current EPS of ₹65.7. Margins are currently sitting at 11%, approximately the same as previous years. With analysts forecasting revenue growth of 0.43038 and SKFINDIA's net income growth expected to roughly track that, this company may add value for shareholders over time.
Next Steps:
Future outlook is only one aspect when you're building an investment case for a stock. For SKF India, there are three pertinent 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 SKF India 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 SKF India 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 SKF India? 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.