The most recent earnings update Trifast plc's (LON:TRI) released in June 2019 confirmed that the business endured a major headwind with earnings falling by -19%. Below is a brief commentary on my key takeaways on how market analysts view Trifast's earnings growth outlook over the next few years and whether the future looks brighter. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.
Analysts' expectations for this coming year seems rather subdued, with earnings growing by a single digit 9.4%. The growth outlook in the following year seems much more optimistic with rates generating double digit 21% compared to today’s earnings, and finally hitting UK£16m by 2022.
While it’s informative knowing the growth rate each year relative to today’s level, it may be more valuable to determine the rate at which the earnings are rising or falling on average every year. The pro of this approach is that we can get a bigger picture of the direction of Trifast'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'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 8.8%. This means that, we can assume Trifast will grow its earnings by 8.8% every year for the next few years.
For Trifast, there are three relevant 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 TRI 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 TRI is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of TRI? 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 firstname.lastname@example.org. 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.