What Should We Expect From XP Power Limited’s (LON:XPP) Earnings In The Year Ahead?
In December 2017, XP Power Limited (LSE:XPP) released its most recent earnings update. Generally, analysts seem fairly confident, with earnings expected to grow by 12.96% in the upcoming year relative to the past 5-year average growth rate of 4.38%. By 2019, we can expect XP Power’s bottom line to reach UK£31.97M, a jump from the current UK£28.30M. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for XP Power in the longer term. Investors wanting to learn more about other aspects of the company should research its fundamentals here. See our latest analysis for XP Power
Exciting times ahead?
The longer term view from the 3 analysts covering XPP is one of positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To reduce the year-on-year volatility of analyst earnings forecast, I’ve inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
This results in an annual growth rate of 8.34% based on the most recent earnings level of UK£28.30M to the final forecast of UK£36.89M by 2021. This leads to an EPS of £1.9 in the final year of projections relative to the current EPS of £1.48. The primary reason for earnings growth is due to cost cutting activities, as revenues is expected to grow much slower than earnings. In 2021, XPP’s profit margin will have expanded from 16.97% to 18.39%.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For XP Power, I’ve put together three pertinent aspects you should further research:
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 XP Power 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 XP Power is currently mispriced by the market.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of XP Power? 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.
