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In December 2018, Olin Corporation (NYSE:OLN) announced its latest earnings update, which confirmed that the business endured a major headwind with earnings falling by -40%. Below, I’ve presented key growth figures on how market analysts view Olin’s earnings growth trajectory 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.
Analysts’ outlook for the coming year seems pessimistic, with earnings reducing by a double-digit -14%. However, the next few years seem to illustrate a completely different picture, with expected earnings growth rates arriving at double digit 18% compared to today’s level and continues to increase.
While it is informative understanding the growth each year relative to today’s figure, it may be more insightful determining the rate at which the earnings are moving every year, on average. The pro of this method is that it ignores near term flucuations and accounts for the overarching direction of Olin’s earnings trajectory over time, which may be more relevant for long term investors. To compute 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 9.4%. This means, we can anticipate Olin will grow its earnings by 9.4% every year for the next couple of years.
For Olin, I’ve compiled three relevant factors you should further examine:
- 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 OLN 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 OLN is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of OLN? 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 past 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. For errors that warrant correction please contact the editor at firstname.lastname@example.org.