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The latest earnings announcement US Ecology, Inc. (NASDAQ:ECOL) released in December 2018 suggested that the business gained from a small tailwind, leading to a single-digit earnings growth of 0.5%. Below, I've laid out key numbers on how market analysts predict US Ecology's earnings growth trajectory over the next couple of 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.
Analysts' expectations for next year seems rather subdued, with earnings rising by a single digit 0.2%. The growth outlook in the following year seems much more optimistic with rates arriving at double digit 16% compared to today’s earnings, and finally hitting US$69m by 2022.
Although it is informative understanding the growth year by year relative to today’s value, it may be more insightful to determine the rate at which the business is rising or falling every year, on average. The pro of this approach is that we can get a bigger picture of the direction of US Ecology'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 9.5%. This means that, we can anticipate US Ecology will grow its earnings by 9.5% every year for the next couple of years.
For US Ecology, there are three important aspects you should look at:
- 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.
- Valuation: What is ECOL 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 ECOL is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ECOL? 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 email@example.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.