Will CDK Global Inc’s (CDK) Earnings Grow In The Year Ahead?
CDK Global Inc (NASDAQ:CDK) is predicted to grow its earnings per share by a massive 125.68% over the next three years. With the recent EPS being $2.015, expected growth will push the upcoming EPS to $4.547. Today I will look at the latest data in order to investigate whether this expected growth rate is plausible. Check out our latest analysis for CDK Global
What can we expect from CDK Global Inc (NASDAQ:CDK) in the future?
The excitement around CDK Global’s growth potential is not unfounded. Expectation from 6 analysts is certainly positive, with earnings estimated to shoot up from current levels of $2.015 to $4.547 over the next couple of years. This indicates a relatively solid earnings per share growth rate of 125.68% over the next few years, which is an optimistic outlook in the near term. In the same period we will see the revenue increase from $2,220M to $2,550M and profits (net income) are predicted to shoot from $296M to $667M in the next couple of years, more than doubling from the most recent level. At this level of revenue and profit, margins are predicted to be extremely healthy as well.
Is this similar growth to the past?
The past can be an insightful indicator for future performance for a stock. We can determine whether this level of expected growth is sustainable and whether the company continues to go from strength to strength. CDK’s earnings growth the past couple of years was 58.54% which indicates that the company’s past performance will continue to persist into the future. This means CDK has already proven its capacity to grow at a strong rate, which should give investors higher conviction of analysts’ consensus prediction for the company’s future growth going forward.
Next Steps:
For CDK, I’ve compiled three essential factors you should further examine:
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 CDK 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 CDK is currently mispriced by the market.
3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of CDK? 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.
