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PolyOne Corporation (NYSE:POL): Is It A Smart Long Term Opportunity?

Kyle Sanford

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After PolyOne Corporation’s (NYSE:POL) earnings announcement on 31 December 2018, analysts seem fairly confident, with earnings expected to grow by 23% in the upcoming year relative to the past 5-year average growth rate of 14%. By 2020, we can expect PolyOne’s bottom line to reach US$198m, a jump from the current trailing-twelve-month of US$161m. Below is a brief commentary around PolyOne’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.

See our latest analysis for PolyOne

How will PolyOne perform in the near future?

Over the next three years, it seems the consensus view of the 11 analysts covering POL is skewed towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. I’ve plotted out each year’s earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of POL’s earnings growth over these next few years.

NYSE:POL Future Profit February 17th 19

This results in an annual growth rate of 15% based on the most recent earnings level of US$161m to the final forecast of US$285m by 2022. EPS reaches $3.8 in the final year of forecast compared to the current $2.02 EPS today. Margins are currently sitting at 4.6%, which is expected to expand to 7.3% by 2022.

Next Steps:

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