Severn Trent Plc (LSE:SVT) is expected to deliver a low, single-digit 2.20% in earnings growth per share over the next three years. At a current EPS of £1.401, this growth rate means shareholders can expect an impending EPS of £1.432. To determine whether this growth rate expectation is justified, we should take a look at how the company has been performing in the past. Check out our latest analysis for Severn Trent
Can we expect SVT to keep growing?
Analyst expectation from the stock’s 12 analysts is one of positive sentiment, with earnings estimated to expand from current levels of £1.401 to £1.432 over the next couple of years. This illustrates a relatively optimistic outlook in the near term, with a relatively solid earnings per share growth rate of 2.20% over the next few years. During the same time we will see the revenue grow from £1,819M to £1,937M and net income is predicted to slightly grow from £329M to £336M in the next couple of years, roughly staying around the same level. Moreover, future margins are predicted to be a respectable 15.98%.
Is this similar growth to the past?
The past can be a helpful indicator for future performance for a stock. We can determine whether this level of expected growth exhibits a continuation of this level or if the company is expected to face some further headwinds. SVT delivered a high double-digit growth rate in the past year, compared to the less exciting rate expected this year. This may indicate a more sustainable level of growth as the company comes off a high-growth period. Conversely, a weaker company outlook may raise the question of its ability to continue outperforming.
For SVT, I’ve put together three pertinent 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 SVT 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 SVT is currently mispriced by the market.
3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of SVT? 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 pass 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.