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What Do Analysts Think About WABCO Holdings Inc.’s (NYSE:WBC) Earnings Outlook?

Simply Wall St

WABCO Holdings Inc.’s (NYSE:WBC) released its most recent earnings update in December 2018, which suggested that the business faced a minor headwind with earnings deteriorating from US$406m to US$394m, a change of -3.0%. Below, I’ve laid out key numbers on how market analysts view WABCO Holdings’s earnings growth trajectory over the next couple of 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.

View our latest analysis for WABCO Holdings

Market analysts’ consensus outlook for this coming year seems pessimistic, with earnings decreasing by -5.1%. Over the medium term, earnings are expected to continue to be below today’s level, with a decline of -1.8% in 2021, eventually reaching US$387m in 2022.

NYSE:WBC Past and Future Earnings, March 1st 2019

Even though it is useful to be aware of the growth each year relative to today’s figure, it may be more insightful to estimate the rate at which the business is rising or falling on average every year. The pro of this technique is that we can get a better picture of the direction of WABCO Holdings’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 2.2%. This means that, we can presume WABCO Holdings will grow its earnings by 2.2% every year for the next couple of years.

Next Steps:

For WABCO Holdings, there are three fundamental factors you should further research:

  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 WBC 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 WBC is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of WBC? 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.