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What Should You Know About MRC Global Inc.'s (NYSE:MRC) Earnings Trend?

Simply Wall St

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MRC Global Inc.'s (NYSE:MRC) announced its latest earnings update in December 2018, which signalled that the company benefited from a large tailwind, leading to a high double-digit earnings growth of 92%. Investors may find it useful to understand how market analysts perceive MRC Global'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.

Check out our latest analysis for MRC Global

Analysts' expectations for the upcoming year seems buoyant, with earnings rising by a robust 40%. This growth in earnings is expected to continue at an exponential rate, bringing the bottom line up to US$141m by 2022.

NYSE:MRC Past and Future Earnings, May 3rd 2019

Although it’s useful to be aware of the growth year by year relative to today’s level, it may be more insightful to estimate the rate at which the company is growing every year, on average. The benefit of this method is that it ignores near term flucuations and accounts for the overarching direction of MRC Global's earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I've inserted 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 26%. This means that, we can assume MRC Global will grow its earnings by 26% every year for the next few years.

Next Steps:

For MRC Global, I've put together three key factors you should look at:

  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 MRC 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 MRC is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of MRC? 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.