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The latest earnings update Caesarstone Ltd’s (NASDAQ:CSTE) released in December 2017 showed that the business experienced a substantial headwind with earnings declining by -65.35%. Investors may find it useful to understand how market analysts predict Caesarstone’s earnings growth outlook over the next few years and whether the future looks brighter. 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 Caesarstone
Analysts’ expectations for the upcoming year seems optimistic, with earnings expanding by a significant 88.10%. This strong growth in earnings is expected to continue, bringing the bottom line up to US$57.99M by 2021.
Even though it’s helpful to be aware of the growth year by year relative to today’s level, it may be more beneficial to evaluate the rate at which the company is moving every year, on average. The pro of this approach is that it removes the impact of near term flucuations and accounts for the overarching direction of Caesarstone’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 analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 25.21%. This means, we can assume Caesarstone will grow its earnings by 25.21% every year for the next couple of years.
For Caesarstone, I’ve compiled three pertinent aspects 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 CSTE 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 CSTE is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of CSTE? 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.