U.S. Markets open in 7 hrs 30 mins

What Should Investors Know About Silgan Holdings Inc.’s (NASDAQ:SLGN) Earnings Trend?

Simply Wall St

Silgan Holdings Inc.’s (NASDAQ:SLGN) most recent earnings update in December 2018 indicated that the business experienced a major headwind with earnings falling by -17%. Below is my commentary, albeit very simple and high-level, on how market analysts perceive Silgan Holdings’s earnings growth trajectory over the next couple of years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.

View our latest analysis for Silgan Holdings

Market analysts’ prospects for this coming year seems rather muted, with earnings rising by a single digit 5.4%. The growth outlook in the following year seems much more optimistic with rates generating double digit 15% compared to today’s earnings, and finally hitting US$272m by 2022.

NasdaqGS:SLGN Past and Future Earnings, March 4th 2019

While it’s helpful to understand the rate of growth each year relative to today’s level, it may be more insightful to estimate the rate at which the company is growing on average every year. The pro of this technique is that it removes the impact of near term flucuations and accounts for the overarching direction of Silgan Holdings’s earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I’ve inserted a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 6.7%. This means, we can presume Silgan Holdings will grow its earnings by 6.7% every year for the next couple of years.

Next Steps:

For Silgan Holdings, I’ve put together three fundamental factors you should further research:

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