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The most recent earnings update Steelcase Inc.'s (NYSE:SCS) released in February 2019 signalled that the business benefited from a sizeable tailwind, leading to a high double-digit earnings growth of 56%. Below, I've presented key growth figures on how market analysts perceive Steelcase's earnings growth outlook over the next couple of years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
Analysts' outlook for the coming year seems buoyant, with earnings growing by a robust 24%. This growth seems to continue into the following year with rates reaching double digit 40% compared to today’s earnings, and finally hitting US$206m by 2022.
While it’s useful to understand the growth year by year relative to today’s figure, it may be more insightful to estimate the rate at which the earnings are growing on average every year. The advantage of this approach is that it removes the impact of near term flucuations and accounts for the overarching direction of Steelcase's earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I've inserted 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 13%. This means that, we can presume Steelcase will grow its earnings by 13% every year for the next couple of years.
For Steelcase, there are three fundamental factors 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 SCS 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 SCS is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of SCS? 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 email@example.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.