Escorts Limited (NSE:ESCORTS): Are Analysts Bullish?

The most recent earnings announcement Escorts Limited’s (NSEI:ESCORTS) released in March 2018 revealed that the business benefited from a substantial tailwind, more than doubling its earnings from the prior year. Today I want to provide a brief commentary on how market analysts predict Escorts’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. View our latest analysis for Escorts

Analysts’ expectations for the coming year seems buoyant, with earnings rising by a robust 29.07%. This growth seems to continue into the following year with rates arriving at double digit 55.28% compared to today’s earnings, and finally hitting ₹6.75B by 2021.

NSEI:ESCORTS Future Profit Jun 21st 18

While it is informative knowing the growth year by year relative to today’s figure, it may be more valuable analyzing the rate at which the earnings are moving every year, on average. The advantage of this approach is that we can get a bigger picture of the direction of Escorts’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I’ve inserted a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 20.02%. This means that, we can anticipate Escorts will grow its earnings by 20.02% every year for the next few years.

Next Steps:

For Escorts, I’ve compiled three pertinent factors you should look at:

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 ESCORTS 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 ESCORTS is currently mispriced by the market.

3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ESCORTS? 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 pass 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.