UDG Healthcare plc’s (LSE:UDG) latest earnings update in September 2017 confirmed that the company benefited from a slight tailwind, eventuating to a single-digit earnings growth of 5.50%. Below, I’ve presented key growth figures on how market analysts view UDG Healthcare’s earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings. See our latest analysis for UDG Healthcare
Market analysts’ consensus outlook for the coming year seems positive, with earnings climbing by a robust 26.77%. This growth seems to continue into the following year with rates arriving at double digit 48.13% compared to today’s earnings, and finally hitting US$115.51M by 2021.
While it is informative knowing the growth year by year relative to today’s level, it may be more beneficial to determine the rate at which the business is rising or falling on average every year. The benefit of this method is that it ignores near term flucuations and accounts for the overarching direction of UDG Healthcare’s earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I’ve appended a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 10.47%. This means that, we can expect UDG Healthcare will grow its earnings by 10.47% every year for the next couple of years.
For UDG Healthcare, I’ve put together three pertinent aspects 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 UDG 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 UDG is currently mispriced by the market.
3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of UDG? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.