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Looking at Genpact Limited's (NYSE:G) earnings update in December 2018, analysts seem fairly confident, with profits predicted to increase by 9.3% next year compared with the past 5-year average growth rate of 6.7%. With trailing-twelve-month net income at current levels of US$282m, we should see this rise to US$308m in 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
How is Genpact going to perform in the near future?
The longer term expectations from the 11 analysts of G is tilted towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. 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 G's earnings growth over these next few years.
This results in an annual growth rate of 11% based on the most recent earnings level of US$282m to the final forecast of US$396m by 2022. This leads to an EPS of $2.08 in the final year of projections relative to the current EPS of $1.48. In 2022, G's profit margin will have expanded from 9.4% to 9.8%.
Future outlook is only one aspect when you're building an investment case for a stock. For Genpact, I've put together three relevant factors 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 Genpact 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 Genpact is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Genpact? 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.