Based on Bio-Techne Corporation’s (NASDAQ:TECH) earnings update in June 2018, analyst consensus outlook seem pessimistic, with earnings expected to decline by -16.7% in the upcoming year. Though this outlook is not unsubstantiated given the negative past 5-year average earnings growth. With trailing-twelve-month net income at current levels of US$126.0m, the consensus growth rate suggests that earnings will decline to US$105.1m by 2019. I will provide a brief commentary around the figures and analyst expectations in the near term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
Can we expect Bio-Techne to keep growing?
Over the next three years, it seems the consensus view of the 7 analysts covering TECH is skewed towards the positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. I’ve plotted out each year’s earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of TECH’s earnings growth over these next few years.
By 2021, TECH’s earnings should reach US$147.3m, from current levels of US$126.0m, resulting in an annual growth rate of 4.4%. This leads to an EPS of $3.75 in the final year of projections relative to the current EPS of $3.36. Growth in earnings appears to be a result of a high top-line growth of 11.5% falling down into the bottom line. This high rate of growth of revenue squeezes margins, as analysts predict an upcoming margin contraction from the current 19.6% to 16.5% by the end of 2021.
Future outlook is only one aspect when you’re building an investment case for a stock. For Bio-Techne, I’ve put together three essential 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 Bio-Techne 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 Bio-Techne is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Bio-Techne? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.