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Tejas Networks Limited (NSE:TEJASNET): Poised For Long-Term Success?

Simply Wall St

In March 2019, Tejas Networks Limited (NSE:TEJASNET) released its latest earnings announcement, which revealed that the business experienced a strong tailwind, eventuating to a double-digit earnings growth of 38%. Below, I've presented key growth figures on how market analysts predict Tejas Networks's earnings growth outlook over the next few years and whether the future looks even brighter than the past. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.

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See our latest analysis for Tejas Networks

Market analysts' consensus outlook for next year seems pessimistic, with earnings decreasing by -2.3%. But in the following year, there is a complete contrast in performance, with reaching double digit 14% compared to today’s level and continues to increase to ₹1.9b in 2022.

NSEI:TEJASNET Past and Future Earnings, May 18th 2019

Even though it’s informative understanding the growth year by year relative to today’s value, it may be more insightful to estimate the rate at which the earnings are growing on average every year. The benefit of this technique is that we can get a bigger picture of the direction of Tejas Networks'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 put a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 7.8%. This means that, we can anticipate Tejas Networks will grow its earnings by 7.8% every year for the next few years.

Next Steps:

For Tejas Networks, there are three relevant aspects 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 TEJASNET 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 TEJASNET is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of TEJASNET? 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.