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The latest earnings announcement Victrex plc (LON:VCT) released in September 2018 showed that the company experienced a robust tailwind, eventuating to a double-digit earnings growth of 11%. Below, I’ve presented key growth figures on how market analysts predict Victrex’s earnings growth outlook over the next couple of years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
Analysts’ expectations for this coming year seems rather muted, with earnings expanding by a single digit 0.2%. The following year doesn’t look much more exciting, though earnings does reach UK£127m in 2022.
Although it’s useful to understand the rate of growth each year relative to today’s figure, it may be more beneficial to evaluate the rate at which the company is growing on average every year. The benefit of this technique is that it ignores near term flucuations and accounts for the overarching direction of Victrex’s earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I’ve inserted 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 4.5%. This means, we can assume Victrex will grow its earnings by 4.5% every year for the next few years.
For Victrex, I’ve compiled three fundamental 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 VCT 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 VCT is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of VCT? 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 email@example.com.