Since Hindustan Unilever Limited (NSE:HINDUNILVR) released its earnings in March 2018, the consensus outlook from analysts appear fairly confident, as a 19.14% increase in profits is expected in the upcoming year, compared with the past 5-year average growth rate of 7.63%. With net income at current levels of ₹52.12b, we should see this rise to ₹62.10b in 2019. Below is a brief commentary around Hindustan Unilever’s earnings outlook going forward, which may give you a sense of market sentiment for the company. Readers that are interested in understanding the company beyond these figures should research its fundamentals here. Check out our latest analysis for Hindustan Unilever
How will Hindustan Unilever perform in the near future?
The longer term expectations from the 20 analysts of HINDUNILVR 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 HINDUNILVR’s earnings growth over these next few years.
By 2021, HINDUNILVR’s earnings should reach ₹82.66b, from current levels of ₹52.12b, resulting in an annual growth rate of 14.99%. EPS reaches ₹37.68 in the final year of forecast compared to the current ₹24.08 EPS today. Earnings growth appears to be a result of reduction in costs rather than purely top-line expansion as earnings is increasing at a faster rate. With a current profit margin of 14.66%, this movement will result in a margin of 16.52% by 2021.
Future outlook is only one aspect when you’re building an investment case for a stock. For Hindustan Unilever, there are 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 Hindustan Unilever 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 Hindustan Unilever is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Hindustan Unilever? 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.