In December 2018, Werner Enterprises, Inc. (NASDAQ:WERN) released its latest earnings announcement, which signalled that the business experienced a substantial headwind with earnings deteriorating by -17%. Investors may find it useful to understand how market analysts perceive Werner Enterprises's earnings growth trajectory over the next couple of years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
Analysts' outlook for next year seems rather subdued, with earnings growing by a single digit 9.2%. The growth outlook in the following year seems much more optimistic with rates reaching double digit 10% compared to today’s earnings, and finally hitting US$203m by 2022.
While it’s useful to understand the growth rate year by year relative to today’s figure, it may be more valuable evaluating the rate at which the earnings are moving on average every year. The benefit of this method is that it removes the impact of near term flucuations and accounts for the overarching direction of Werner Enterprises's earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I've appended a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 5.0%. This means that, we can expect Werner Enterprises will grow its earnings by 5.0% every year for the next few years.
For Werner Enterprises, I've compiled three fundamental 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 WERN 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 WERN is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of WERN? 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.