The latest earnings announcement Industrias Bachoco, S.A.B. de C.V. (NYSE:IBA) released in December 2018 signalled that the business faced a immense headwind with earnings declining by -31%. Below, I’ve laid out key numbers on how market analysts view Industrias Bachoco. de’s earnings growth outlook over the next couple of years and whether the future looks brighter. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.
Market analysts’ prospects for the coming year seems rather subdued, with earnings rising by a single digit 5.2%. The growth outlook in the following year seems much more optimistic with rates generating double digit 13% compared to today’s earnings, and finally hitting Mex$4.6b by 2022.
While it is useful to be aware of the growth rate each year relative to today’s value, it may be more beneficial to evaluate the rate at which the company is moving every year, on average. The benefit of this method is that we can get a bigger picture of the direction of Industrias Bachoco. de’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To compute this rate, I put a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 7.7%. This means, we can anticipate Industrias Bachoco. de will grow its earnings by 7.7% every year for the next few years.
For Industrias Bachoco. de, I’ve compiled three key 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 IBA 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 IBA is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of IBA? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.