What Should Investors Know About The Future Of Magellan Aerospace Corporation’s (TSE:MAL)?
Magellan Aerospace Corporation’s (TSX:MAL) latest earnings announcement in December 2017 suggested that the business gained from a strong tailwind, eventuating to a double-digit earnings growth of 25.62%. Investors may find it useful to understand how market analysts perceive Magellan Aerospace’s earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in. See our latest analysis for Magellan Aerospace
Analysts’ outlook for this coming year seems pessimistic, with earnings falling by a double-digit -12.33%. In the next couple of years, earnings will begin to improve, rising year on year, and generating CA$117.47M by 2021.
Even though it is informative understanding the growth each year relative to today’s value, it may be more beneficial to evaluate the rate at which the company is growing every year, on average. The benefit of this technique is that we can get a bigger picture of the direction of Magellan Aerospace’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I’ve inserted 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 2.65%. This means that, we can anticipate Magellan Aerospace will grow its earnings by 2.65% every year for the next couple of years.
Next Steps:
For Magellan Aerospace, I’ve compiled three essential factors you should look at:
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 MAL 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 MAL is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of MAL? 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.
