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Lancaster Colony Corporation (NASDAQ:LANC): Immense Growth Potential?

Ricardo Crouch

Looking at Lancaster Colony Corporation’s (NASDAQ:LANC) earnings update in June 2018, it seems that analyst forecasts are fairly optimistic, as a 5.7% increase in profits is expected in the upcoming year, against the past 5-year average growth rate of 4.1%. With trailing-twelve-month net income at current levels of US$135.3m, we should see this rise to US$143.0m in 2019. Below is a brief commentary around Lancaster Colony’s earnings outlook going forward, which may give you a sense of market sentiment for the company. For those interested in more of an analysis of the company, you can research its fundamentals here.

Check out our latest analysis for Lancaster Colony

Can we expect Lancaster Colony to keep growing?

The view from 4 analysts over the next three years is one of positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To understand the overall trajectory of LANC’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.

NasdaqGS:LANC Future Profit August 28th 18

By 2021, LANC’s earnings should reach US$158.7m, from current levels of US$135.3m, resulting in an annual growth rate of 5.5%. This leads to an EPS of $5.75 in the final year of projections relative to the current EPS of $4.94. The main reason for growth is a result of cost-cutting initiatives, since top-line is predicted to rise at a slower pace than earnings. With a current profit margin of 11.1%, this movement will result in a margin of 12.0% by 2021.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For Lancaster Colony, I’ve put together three key aspects you should further research:

  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 Lancaster Colony 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 Lancaster Colony is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Lancaster Colony? 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 past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.