The most recent earnings update Altair Engineering Inc.’s (NASDAQ:ALTR) released in December 2018 signalled that the company finally turned profitable after delivering negative earnings on average over the last couple of years. Below is my commentary, albeit very simple and high-level, on how market analysts predict Altair Engineering’s earnings growth outlook over the next couple of years and whether the future looks brighter. 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.
Market analysts’ prospects for next year seems buoyant, with earnings climbing by a robust 47%. Earnings are predicted to shoot up to around US$36m in the following year before plateauing, heading into 2022.
Even though it’s useful to understand the growth rate year by year relative to today’s level, it may be more insightful to analyze the rate at which the earnings are moving every year, on average. The advantage of this approach is that it removes the impact of near term flucuations and accounts for the overarching direction of Altair Engineering’s earnings trajectory over time, be more volatile. To compute this rate, I’ve appended a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 36%. This means that, we can anticipate Altair Engineering will grow its earnings by 36% every year for the next couple of years.
For Altair Engineering, I’ve put together three key 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 ALTR 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 ALTR is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ALTR? 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.