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What Should You Know About The Future Of Bodycote plc's (LON:BOY)?

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  • BOY.L

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In December 2018, Bodycote plc (LON:BOY) released its most recent earnings announcement, which confirmed that the company benefited from a slight tailwind, eventuating to a single-digit earnings growth of 6.3%. Below, I've presented key growth figures on how market analysts view Bodycote's earnings growth outlook over the next few years and whether the future looks even brighter than the past. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.

View our latest analysis for Bodycote

Market analysts' consensus outlook for next year seems pessimistic, with earnings falling by -1.2%. But in the following year, there is a complete contrast in performance, with arriving at double digit 4.2% compared to today’s level and continues to increase to UK£114m in 2022.

LSE:BOY Past and Future Earnings, April 7th 2019
LSE:BOY Past and Future Earnings, April 7th 2019

Even though it’s informative knowing the growth each year relative to today’s figure, it may be more valuable to gauge the rate at which the business is growing every year, on average. The pro of this approach is that it removes the impact of near term flucuations and accounts for the overarching direction of Bodycote's earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I put 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 4.4%. This means that, we can expect Bodycote will grow its earnings by 4.4% every year for the next couple of years.

Next Steps:

For Bodycote, I've compiled 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 BOY 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 BOY is currently mispriced by the market.

  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of BOY? 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.