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Croda International Plc (LON:CRDA): What Can We Expect From This High Growth Stock?

Simply Wall St

The most recent earnings announcement Croda International Plc’s (LON:CRDA) released in December 2018 revealed that the business experienced a small tailwind, leading to a single-digit earnings growth of 0.6%. Below, I’ve laid out key growth figures on how market analysts predict Croda International’s earnings growth trajectory over the next few years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.

Check out our latest analysis for Croda International

Analysts’ outlook for next year seems positive, with earnings expanding by a robust 12%. This growth seems to continue into the following year with rates reaching double digit 20% compared to today’s earnings, and finally hitting UK£303m by 2022.

LSE:CRDA Past and Future Earnings, February 28th 2019
LSE:CRDA Past and Future Earnings, February 28th 2019

Even though it is helpful to understand the rate of growth year by year relative to today’s level, it may be more insightful gauging the rate at which the business is moving on average every year. The benefit of this approach is that it ignores near term flucuations and accounts for the overarching direction of Croda International’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 8.1%. This means, we can anticipate Croda International will grow its earnings by 8.1% every year for the next couple of years.

Next Steps:

For Croda International, I’ve put together three essential factors you should further research:

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  1. 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.

  2. Valuation: What is CRDA 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 CRDA is currently mispriced by the market.

  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of CRDA? 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 editorial-team@simplywallst.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.