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What Should You Know About Profire Energy, Inc.'s (NASDAQ:PFIE) Long Term Outlook?

Simply Wall St

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Profire Energy, Inc.'s (NASDAQ:PFIE) latest earnings announcement in December 2018 showed that the company benefited from a robust tailwind, leading to a double-digit earnings growth of 37%. Below is a brief commentary on my key takeaways on how market analysts predict Profire Energy's earnings growth trajectory over the next couple of 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.

View our latest analysis for Profire Energy

Market analysts' prospects for this coming year seems rather subdued, with earnings increasing by a single digit 4.6%. The growth outlook in the following year seems much more optimistic with rates reaching double digit 20% compared to today’s earnings, and finally hitting US$11m by 2022.

NasdaqCM:PFIE Past and Future Earnings, April 30th 2019
NasdaqCM:PFIE Past and Future Earnings, April 30th 2019

While it’s informative understanding the growth rate year by year relative to today’s value, it may be more valuable to estimate the rate at which the earnings are rising or falling on average every year. The pro of this method is that we can get a better picture of the direction of Profire Energy'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 appended 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 15%. This means that, we can assume Profire Energy will grow its earnings by 15% every year for the next few years.

Next Steps:

For Profire Energy, there are three important factors you should further examine:

  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 PFIE 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 PFIE is currently mispriced by the market.

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