Based on LKQ Corporation's (NASDAQ:LKQ) earnings update in June 2019, analyst consensus outlook appear cautiously optimistic, as a 50% increase in profits is expected in the upcoming year, relative to the past 5-year average growth rate of 6.5%. Presently, with latest-twelve-month earnings at US$485m, we should see this growing to US$725m by 2020. Below is a brief commentary on the longer term outlook the market has for LKQ. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
Can we expect LKQ to keep growing?
The view from 14 analysts over the next three years is one of positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. 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.
This results in an annual growth rate of 15% based on the most recent earnings level of US$485m to the final forecast of US$953m by 2022. EPS reaches $2.66 in the final year of forecast compared to the current $1.54 EPS today. In 2022, LKQ's profit margin will have expanded from 4.1% to 7.4%.
Future outlook is only one aspect when you're building an investment case for a stock. For LKQ, there are three essential 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 LKQ 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 LKQ is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of LKQ? 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 email@example.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.