Belden Inc.’s (NYSE:BDC) released its most recent earnings update in December 2018, which revealed that the business benefited from a major tailwind, more than doubling its earnings from the prior year. Investors may find it useful to understand how market analysts view Belden’s earnings growth trajectory 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.
Market analysts’ prospects for this coming year seems positive, with earnings expanding by a robust 33%. This growth seems to continue into the following year with rates reaching double digit 66% compared to today’s earnings, and finally hitting US$222m by 2022.
Although it’s helpful to understand the growth each year relative to today’s level, it may be more beneficial to gauge the rate at which the company is growing every year, on average. The benefit of this method is that we can get a bigger picture of the direction of Belden’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 19%. This means that, we can anticipate Belden will grow its earnings by 19% every year for the next few years.
For Belden, I’ve put together three important 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 BDC 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 BDC is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of BDC? 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.