Since Steppe Cement Ltd. (LON:STCM) released its earnings in December 2018, the consensus outlook from analysts appear highly confident, with profits predicted to ramp up by an impressive 52% next year, relative to the historical 5-year average growth rate of 16%. With trailing-twelve-month net income at current levels of US$8.9m, we should see this rise to US$14m in 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for Steppe Cement in the longer term. For those interested in more of an analysis of the company, you can research its fundamentals here.
Can we expect Steppe Cement to keep growing?
Over the next three years, it seems the consensus view of the 1 analysts covering STCM is skewed towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around 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 STCM's earnings growth over these next few years.
This results in an annual growth rate of 7.4% based on the most recent earnings level of US$8.9m to the final forecast of US$15m by 2022. EPS reaches $0.071 in the final year of forecast compared to the current $0.041 EPS today. Margins are currently sitting at 11%, which is expected to expand to 17% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Steppe Cement, there are three key aspects you should look at:
- 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 Steppe Cement 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 Steppe Cement is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Steppe Cement? 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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