The latest earnings release Eckoh plc’s (LON:ECK) announced in March 2018 showed that the company experienced a large tailwind, eventuating to a high double-digit earnings growth of 84.9%. Today I want to provide a brief commentary on how market analysts perceive Eckoh’s earnings growth trajectory over the next couple of 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 this coming year seems pessimistic, with earnings falling by a double-digit -43.6%. Beyond this, earnings will begin to improve, increasing year on year, and arriving at UK£4.1m by 2021.
Although it is useful to be aware of the growth rate year by year relative to today’s figure, it may be more insightful evaluating the rate at which the business is growing on average every year. The benefit of this method is that it removes the impact of near term flucuations and accounts for the overarching direction of Eckoh’s earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I’ve appended 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 20.0%. This means, we can presume Eckoh will grow its earnings by 20.0% every year for the next few years.
For Eckoh, there are three essential aspects 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 ECK 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 ECK is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ECK? 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 firstname.lastname@example.org.