Steppe Cement Ltd.'s (LON:STCM) released its most recent earnings update in May 2019, which indicated that the business experienced a major tailwind, more than doubling its earnings from the prior year. Below, I've laid out key numbers on how market analysts predict Steppe Cement's earnings growth outlook over the next few 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.
Analysts' expectations for next year seems optimistic, with earnings growing by a significant 52%. Earnings are predicted to shoot up to around US$15m in the following year before plateauing, heading into 2022.
Even though it is useful to be aware of the growth rate year by year relative to today’s level, it may be more valuable determining the rate at which the business is moving every year, on average. The pro of this method is that it ignores near term flucuations and accounts for the overarching direction of Steppe Cement's earnings trajectory over time, which may be more relevant for long term investors. To compute 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 7.4%. This means that, we can assume Steppe Cement will grow its earnings by 7.4% every year for the next couple of years.
For Steppe Cement, I've put together three important aspects 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 STCM 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 STCM is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of STCM? 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 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.