Since Smiths Group plc ( LON:SMIN ) released its earnings in July 2018, the consensus outlook from analysts appear fairly confident, with profits predicted to increase by 30% next year against the past 5-year average growth rate of 11%. By 2019, we can expect Smiths Group’s bottom line to reach UK£360m, a jump from the current trailing-twelve-month UK£277m. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Smiths Group in the longer term. For those interested in more of an analysis of the company, you can research its fundamentals here .
What can we expect from Smiths Group in the longer term?
Longer term expectations from the 15 analysts covering SMIN’s stock is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To reduce the year-on-year volatility of analyst earnings forecast, I’ve inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
This results in an annual growth rate of 12% based on the most recent earnings level of UK£277m to the final forecast of UK£408m by 2021. EPS reaches £1.03 in the final year of forecast compared to the current £0.70 EPS today. With a current profit margin of 8.6%, this movement will result in a margin of 11% by 2021.
Future outlook is only one aspect when you’re building an investment case for a stock. For Smiths Group, I’ve compiled three relevant factors you should further research:
- 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 Smiths Group 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 Smiths Group is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Smiths Group? 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 .