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What Are Analysts Saying About Incitec Pivot Limited's (ASX:IPL) Future?

Simply Wall St

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Since Incitec Pivot Limited (ASX:IPL) released its earnings in March 2019, it seems that analyst forecasts are fairly optimistic, with profits predicted to increase by 28% next year relative to the past 5-year average growth rate of -9.1%. By 2020, we can expect Incitec Pivot’s bottom line to reach AU$267m, a jump from the current trailing-twelve-month of AU$208m. Below is a brief commentary around Incitec Pivot's earnings outlook going forward, which may give you a sense of market sentiment for the company. For those keen to understand more about other aspects of the company, you can research its fundamentals here.

Check out our latest analysis for Incitec Pivot

What can we expect from Incitec Pivot in the longer term?

The longer term expectations from the 11 analysts of IPL 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 IPL, 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.

ASX:IPL Past and Future Earnings, July 10th 2019

By 2022, IPL's earnings should reach AU$399m, from current levels of AU$208m, resulting in an annual growth rate of 23%. EPS reaches A$0.29 in the final year of forecast compared to the current A$0.12 EPS today. With a current profit margin of 5.4%, this movement will result in a margin of 9.9% by 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Incitec Pivot, I've compiled three important factors you should look at:

  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 Incitec Pivot 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 Incitec Pivot is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Incitec Pivot? 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.