Looking at Hubbell Incorporated’s (NYSE:HUBB) earnings update in June 2018, analysts seem fairly confident, with profits predicted to increase by 47.4% next year against the past 5-year average growth rate of -5.0%. Presently, with latest-twelve-month earnings at US$259.0m, we should see this growing to US$381.7m by 2019. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Hubbell in the longer term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
Exciting times ahead?
Longer term expectations from the 6 analysts covering HUBB’s stock is one of positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. I’ve plotted out each year’s earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of HUBB’s earnings growth over these next few years.
This results in an annual growth rate of 11.7% based on the most recent earnings level of US$242.3m to the final forecast of US$416.1m by 2021. EPS reaches $7.87 in the final year of forecast compared to the current $4.42 EPS today. The primary reason for earnings growth is due to reduction in costs rather than purely top-line expansion as earnings is increasing at a faster rate. With a current profit margin of 6.6%, this movement will result in a margin of 9.5% by 2021.
Future outlook is only one aspect when you’re building an investment case for a stock. For Hubbell, there are three pertinent 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 Hubbell 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 Hubbell is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Hubbell? 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 past 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. For errors that warrant correction please contact the editor at firstname.lastname@example.org.