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The most recent earnings announcement H.B. Fuller Company’s ( NYSE:FUL ) released in December 2018 signalled that the company gained from a substantial tailwind, more than doubling its earnings from the prior year. Investors may find it useful to understand how market analysts perceive H.B. Fuller’s earnings growth trajectory 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.
Market analysts’ prospects for the upcoming year seems pessimistic, with earnings reducing by -3.9%. But in the following year, there is a complete contrast in performance, with arriving at double digit 20% compared to today’s level and continues to increase to US$236m in 2022.
While it is helpful to be aware of the growth rate year by year relative to today’s figure, it may be more valuable to evaluate the rate at which the business is growing every year, on average. The pro of this method is that it ignores near term flucuations and accounts for the overarching direction of H.B. Fuller’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 the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 15%. This means that, we can anticipate H.B. Fuller will grow its earnings by 15% every year for the next couple of years.
For H.B. Fuller, there are three important factors 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 FUL 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 FUL is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of FUL? 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 firstname.lastname@example.org .