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What Should Investors Know About Pentair plc's (NYSE:PNR) Future?

Simply Wall St

After Pentair plc's (NYSE:PNR) earnings announcement on 30 June 2019, analyst consensus outlook appear cautiously optimistic, with earnings expected to grow by 11% in the upcoming year relative to the past 5-year average growth rate of -19%. With trailing-twelve-month net income at current levels of US$322m, we should see this rise to US$358m in 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.

Check out our latest analysis for Pentair

Exciting times ahead?

Over the next three years, it seems the consensus view of the 15 analysts covering PNR is skewed towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To understand the overall trajectory of PNR's earnings growth over these next fews years, I've fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.

NYSE:PNR Past and Future Earnings, August 17th 2019

This results in an annual growth rate of 9.1% based on the most recent earnings level of US$322m to the final forecast of US$426m by 2022. This leads to an EPS of $2.75 in the final year of projections relative to the current EPS of $1.83. In 2022, PNR's profit margin will have expanded from 11% to 13%.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Pentair, I've compiled three important factors you should look at:

  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 Pentair 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 Pentair is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Pentair? 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 editorial-team@simplywallst.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.