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The most recent earnings release ePlus inc.'s (NASDAQ:PLUS) announced in March 2019 signalled that the company benefited from a robust tailwind, leading to a double-digit earnings growth of 15%. Below, I've presented key growth figures on how market analysts perceive ePlus's earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.
Analysts' expectations for next year seems pessimistic, with earnings reducing by -9.4%. Beyond this, earnings are predicted to continue to be below today's level, with a decline of -3.0% in 2021, eventually reaching US$61m in 2022.
While it’s informative understanding the rate of growth year by year relative to today’s level, it may be more valuable to gauge the rate at which the earnings are rising or falling on average every year. The advantage of this technique is that it ignores near term flucuations and accounts for the overarching direction of ePlus's earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I've inserted 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 1.3%. This means, we can assume ePlus will grow its earnings by 1.3% every year for the next couple of years.
For ePlus, I've compiled three important aspects 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 PLUS 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 PLUS is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of PLUS? 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.