In March 2018, Bosch Limited (NSE:BOSCHLTD) released its earnings update. Generally, analysts seem fairly confident, as a 21.2% increase in profits is expected in the upcoming year, relative to the past 5-year average growth rate of 11.7%. Currently with trailing-twelve-month earnings of ₹13.71b, we can expect this to reach ₹16.62b by 2019. Below is a brief commentary on the longer term outlook the market has for Bosch. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
Can we expect Bosch to keep growing?
The longer term view from the 8 analysts covering BOSCHLTD 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 14.1% based on the most recent earnings level of ₹13.71b to the final forecast of ₹20.90b by 2021. This leads to an EPS of ₹683.79 in the final year of projections relative to the current EPS of ₹449.24. The main reason for growth is a result of cost-cutting initiatives, since top-line is predicted to rise at a slower pace than earnings. In 2021, BOSCHLTD’s profit margin will have expanded from 11.9% to 11.9%.
Future outlook is only one aspect when you’re building an investment case for a stock. For Bosch, there are 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 Bosch 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 Bosch is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Bosch? 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.