In March 2019, Catalent, Inc. (NYSE:CTLT) announced its earnings update. Overall, analysts seem fairly confident, with earnings expected to grow by 17% in the upcoming year relative to the past 5-year average growth rate of 6.1%. Currently with trailing-twelve-month earnings of US$84m, we can expect this to reach US$98m by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. For those interested in more of an analysis of the company, you can research its fundamentals here.
Exciting times ahead?
Over the next three years, it seems the consensus view of the 9 analysts covering CTLT is skewed towards the positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. I've plotted out each year's earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of CTLT's earnings growth over these next few years.
From the current net income level of US$84m and the final forecast of US$160m by 2022, the annual rate of growth for CTLT’s earnings is 25%. This leads to an EPS of $1.83 in the final year of projections relative to the current EPS of $0.64. In 2022, CTLT's profit margin will have expanded from 3.4% to 5.0%.
Future outlook is only one aspect when you're building an investment case for a stock. For Catalent, I've compiled three pertinent factors you should further research:
- 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.
- Valuation: What is Catalent 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 Catalent is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Catalent? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.