Blue Buffalo Pet Products Inc (NASDAQ:BUFF): Is It A Good Long Term Opportunity?
In September 2017, Blue Buffalo Pet Products Inc (NASDAQ:BUFF) released its most recent earnings announcement, which revealed that the company experienced a strong tailwind, leading to a double-digit earnings growth of 45.70%. Investors may find it useful to understand how market analysts perceive Blue Buffalo Pet Products’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. View our latest analysis for Blue Buffalo Pet Products
Analysts’ outlook for the upcoming year seems buoyant, with earnings increasing by a robust 20.46%. This growth seems to continue into the following year with rates reaching double digit 45.85% compared to today’s earnings, and finally hitting $326.5M by 2021.
Although it’s helpful to be aware of the growth year by year relative to today’s figure, it may be more valuable to gauge the rate at which the company is moving on average every year. The pro of this method is that we can get a better picture of the direction of Blue Buffalo Pet Products’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 the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 20.85%. This means that, we can anticipate Blue Buffalo Pet Products will grow its earnings by 20.85% every year for the next few years.
Next Steps:
For Blue Buffalo Pet Products, I’ve put together three important aspects you should look at:
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 BUFF 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 BUFF is currently mispriced by the market.
3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of BUFF? 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 pass 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.
