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What Should You Know About Ralph Lauren Corporation's (NYSE:RL) Future?

Simply Wall St

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Looking at Ralph Lauren Corporation's (NYSE:RL) earnings update in March 2019, analysts seem fairly confident, with profits predicted to increase by 41% next year against the past 5-year average growth rate of -34%. Currently with trailing-twelve-month earnings of US$431m, we can expect this to reach US$607m by 2020. Below is a brief commentary on the longer term outlook the market has for Ralph Lauren. For those keen to understand more about other aspects of the company, you can research its fundamentals here.

See our latest analysis for Ralph Lauren

How is Ralph Lauren going to perform in the near future?

The longer term expectations from the 18 analysts of RL is tilted towards the positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To understand the overall trajectory of RL's earnings growth over these next fews years, I've fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.

NYSE:RL Past and Future Earnings, July 9th 2019

From the current net income level of US$431m and the final forecast of US$702m by 2022, the annual rate of growth for RL’s earnings is 11%. This leads to an EPS of $9.44 in the final year of projections relative to the current EPS of $5.35. Margins are currently sitting at 6.8%, which is expected to expand to 10% by 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Ralph Lauren, I've put together three important 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 Ralph Lauren 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 Ralph Lauren is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Ralph Lauren? 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.