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EnerSys (NYSE:ENS): What Are The Future Prospects?

Simply Wall St

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EnerSys's (NYSE:ENS) most recent earnings update in May 2019 showed that the business gained from a strong tailwind, eventuating to a double-digit earnings growth of 34%. Below is a brief commentary on my key takeaways on how market analysts predict EnerSys's earnings growth trajectory over the next few 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.

Check out our latest analysis for EnerSys

Analysts' outlook for the coming year seems positive, with earnings rising by a significant 50%. This high growth in earnings is expected to continue, bringing the bottom line up to US$323m by 2022.

NYSE:ENS Past and Future Earnings, June 26th 2019

Even though it is informative knowing the growth year by year relative to today’s level, it may be more valuable to determine the rate at which the business is growing on average every year. The benefit of this method is that it removes the impact of near term flucuations and accounts for the overarching direction of EnerSys's earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I've appended 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 19%. This means that, we can anticipate EnerSys will grow its earnings by 19% every year for the next few years.

Next Steps:

For EnerSys, there are three pertinent factors 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 ENS 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 ENS is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ENS? 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 editorial-team@simplywallst.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.