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Will HD Supply Holdings Inc’s (NASDAQ:HDS) Earnings Grow In The Year Ahead?

Since HD Supply Holdings Inc (NASDAQ:HDS) released its earnings in July 2018, the consensus outlook from analysts appear highly confident, with earnings expected to grow by a high double-digit of 91% in the upcoming year, relative to the past 5-year average growth rate of 45%. By 2019, we can expect HD Supply Holdings’s bottom line to reach US$472m, a jump from the current trailing-twelve-month US$247m. Below is a brief commentary on the longer term outlook the market has for HD Supply Holdings. Investors wanting to learn more about other aspects of the company should research its fundamentals here.

See our latest analysis for HD Supply Holdings

How is HD Supply Holdings going to perform in the near future?

The 14 analysts covering HDS view its longer term outlook with a positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To get an idea of the overall earnings growth trend for HDS, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.

NasdaqGS:HDS Future Profit October 8th 18

This results in an annual growth rate of 15% based on the most recent earnings level of US$167m to the final forecast of US$407m by 2021. EPS reaches $3.37 in the final year of forecast compared to the current $0.87 EPS today. Growth in earnings appears to be a result of cost cutting activities, as revenues is expected to grow much slower than earnings. With a current profit margin of 3.3%, this movement will result in a margin of 6.5% by 2021.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For HD Supply Holdings, I’ve put together three key factors you should further examine:

  1. 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.
  2. Valuation: What is HD Supply Holdings 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 HD Supply Holdings is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of HD Supply Holdings? 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 editorial-team@simplywallst.com.