After IPG Photonics Corporation's (NASDAQ:IPGP) recent earnings announcement in June 2019, analyst consensus outlook seem bearish, as a 4.7% fall in profits is expected in the upcoming year against the past 5-year average growth rate of 15%. With trailing-twelve-month net income at current levels of US$404m, the consensus growth rate suggests that earnings will decline to US$385m by 2020. Below is a brief commentary around IPG Photonics's earnings outlook going forward, which may give you a sense of market sentiment for the company. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
What can we expect from IPG Photonics in the longer term?
Longer term expectations from the 12 analysts covering IPGP’s stock is one of positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To reduce the year-on-year volatility of analyst earnings forecast, I've inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
By 2022, IPGP's earnings should reach US$641m, from current levels of US$404m, resulting in an annual growth rate of 21%. This leads to an EPS of $8.91 in the final year of projections relative to the current EPS of $7.55. With a current profit margin of 28%, this movement will result in a margin of 31% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For IPG Photonics, I've compiled three pertinent 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 IPG Photonics 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 IPG Photonics is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of IPG Photonics? 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.