The most recent earnings announcement IDEX Corporation’s (NYSE:IEX) released in December 2017 showed that the company gained from a strong tailwind, eventuating to a double-digit earnings growth of 24.40%. Investors may find it useful to understand how market analysts predict IDEX’s earnings growth outlook over the next couple of 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. See our latest analysis for IDEX
Market analysts’ prospects for next year seems positive, with earnings growing by a robust 16.90%. This growth seems to continue into the following year with rates reaching double digit 26.95% compared to today’s earnings, and finally hitting US$464.41M by 2021.
Although it is informative understanding the growth year by year relative to today’s figure, it may be more valuable to evaluate the rate at which the earnings are moving every year, on average. The advantage of this approach is that we can get a bigger picture of the direction of IDEX’s earnings trajectory over the long run, irrespective of near term fluctuations, 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 9.91%. This means, we can anticipate IDEX will grow its earnings by 9.91% every year for the next few years.
For IDEX, I’ve put together three important factors 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 IEX 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 IEX is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of IEX? 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 pass 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.