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Xilinx, Inc.'s (NASDAQ:XLNX) latest earnings update in March 2019 signalled that the company gained from a sizeable tailwind, eventuating to a high double-digit earnings growth of 92%. Below is a brief commentary on my key takeaways on how market analysts predict Xilinx's earnings growth trajectory over the next few years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
Analysts' expectations for this coming year seems optimistic, with earnings increasing by a robust 14%. This growth seems to continue into the following year with rates arriving at double digit 29% compared to today’s earnings, and finally hitting US$1.3b by 2022.
While it is helpful to be aware of the rate of growth each year relative to today’s figure, it may be more beneficial to analyze the rate at which the business is moving on average every year. The pro of this approach is that we can get a better picture of the direction of Xilinx'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 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 12%. This means that, we can expect Xilinx will grow its earnings by 12% every year for the next couple of years.
For Xilinx, I've put together three pertinent aspects you should further research:
- 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 XLNX 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 XLNX is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of XLNX? 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.