The most recent earnings release Shenandoah Telecommunications Company's (NASDAQ:SHEN) announced in December 2018 confirmed that the business faced a immense headwind with earnings declining by -30%. Below, I've presented key growth figures on how market analysts perceive Shenandoah Telecommunications's earnings growth trajectory over the next few years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
Analysts' expectations for next year seems buoyant, with earnings increasing by a robust 38%. This growth seems to continue into the following year with rates arriving at double digit 73% compared to today’s earnings, and finally hitting US$98m by 2022.
While it’s helpful to understand the rate of growth year by year relative to today’s figure, it may be more valuable to determine the rate at which the company is growing on average every year. The pro of this approach is that it ignores near term flucuations and accounts for the overarching direction of Shenandoah Telecommunications's earnings trajectory over time, which may be more relevant for long term investors. To calculate 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 23%. This means, we can anticipate Shenandoah Telecommunications will grow its earnings by 23% every year for the next couple of years.
For Shenandoah Telecommunications, I've compiled three fundamental 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 SHEN 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 SHEN is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of SHEN? 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.