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How Do Analysts See DCC plc (LON:DCC) Performing Over The Next Few Years?

Simply Wall St

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DCC plc's (LON:DCC) most recent earnings announcement in March 2019 confirmed that the business experienced a robust tailwind, eventuating to a double-digit earnings growth of 14%. Investors may find it useful to understand how market analysts perceive DCC's earnings growth outlook 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.

Check out our latest analysis for DCC

Market analysts' prospects for this coming year seems positive, with earnings expanding by a robust 20%. This growth seems to continue into the following year with rates reaching double digit 25% compared to today’s earnings, and finally hitting UK£354m by 2022.

LSE:DCC Past and Future Earnings, June 14th 2019

While it is useful to understand the growth rate year by year relative to today’s figure, it may be more insightful determining the rate at which the business is growing every year, on average. The pro of this approach is that we can get a better picture of the direction of DCC's earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To compute this rate, I put 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 9.4%. This means that, we can presume DCC will grow its earnings by 9.4% every year for the next couple of years.

Next Steps:

For DCC, I've put together three fundamental 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 DCC 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 DCC is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of DCC? 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.