The most recent earnings update US Ecology Inc’s (NASDAQ:ECOL) released in December 2017 suggested that the business experienced a strong tailwind, eventuating to a double-digit earnings growth of 44.12%. Below, I’ve laid out key growth figures on how market analysts perceive US Ecology’s earnings growth trajectory over the next few years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings. View our latest analysis for US Ecology
Market analysts’ consensus outlook for this coming year seems pessimistic, with earnings declining by -1.27%. But in the following year, there is a complete contrast in performance, with reaching double digit 10.69% compared to today’s level and continues to increase to US$59.65M in 2021.
While it’s helpful to be aware of the growth rate each year relative to today’s value, it may be more beneficial estimating the rate at which the business is rising or falling on average every year. The advantage of this method 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 calculate 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 5.82%. This means that, we can assume US Ecology will grow its earnings by 5.82% every year for the next few years.
For US Ecology, there are three relevant factors you should further examine:
- 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!
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.