In June 2018, Ansell Limited (ASX:ANN) released its latest earnings announcement, which revealed that the business benefited from a strong tailwind, leading to a double-digit earnings growth of 16.8%. Below, I’ve presented key growth figures on how market analysts perceive Ansell’s earnings growth trajectory over the next few years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
Analysts’ outlook for the upcoming year seems pessimistic, with earnings decreasing by -4.2%. But in the following year, there is a complete contrast in performance, with reaching double digit 5.1% compared to today’s level and continues to increase to US$158.3m in 2021.
While it is informative knowing the rate of growth year by year relative to today’s value, it may be more beneficial estimating the rate at which the company is moving on average every year. The pro of this technique is that it ignores near term flucuations and accounts for the overarching direction of Ansell’s earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I’ve appended 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 4.7%. This means that, we can anticipate Ansell will grow its earnings by 4.7% every year for the next few years.
For Ansell, I’ve compiled three key aspects you should further examine:
- 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 ANN 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 ANN is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ANN? 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 past 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. For errors that warrant correction please contact the editor at email@example.com.