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HD Supply Holdings, Inc.'s (NASDAQ:HDS) most recent earnings update in February 2019 suggested that the company experienced a major tailwind, more than doubling its earnings from the prior year. Below, I've laid out key growth figures on how market analysts view HD Supply Holdings's earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.
Analysts' expectations for the coming year seems positive, with earnings growing by a robust 33%. This growth seems to continue into the following year with rates reaching double digit 43% compared to today’s earnings, and finally hitting US$623m by 2022.
While it is informative understanding the rate of growth each year relative to today’s figure, it may be more insightful to analyze the rate at which the earnings are rising or falling every year, on average. The advantage of this technique is that we can get a bigger picture of the direction of HD Supply Holdings'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've inserted 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 13%. This means that, we can anticipate HD Supply Holdings will grow its earnings by 13% every year for the next couple of years.
For HD Supply Holdings, there are three key aspects you should further examine:
- 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 HDS 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 HDS is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of HDS? 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 email@example.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.