Yahoo Finance What Should You Know About Convatec Group Plc's (LON:CTEC) Earnings Trajectory?
In December 2018, Convatec Group Plc (LON:CTEC) released its latest earnings announcement, which signalled that the company benefited from a strong tailwind, eventuating to a double-digit earnings growth of 40%. Below, I've laid out key growth figures on how market analysts perceive Convatec Group's earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
View our latest analysis for Convatec Group
Analysts' expectations for the coming year seems pessimistic, with earnings declining by a double-digit -47%. Beyond this, earnings are predicted to continue to be below today's level, with a decline of -26% in 2021, eventually reaching US$164m in 2022.
While it is helpful to understand the rate of growth year by year relative to today’s figure, it may be more beneficial to analyze the rate at which the earnings are growing every year, on average. The pro of this method is that it removes the impact of near term flucuations and accounts for the overarching direction of Convatec Group's earnings trajectory over time, 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 1.8%. This means, we can expect Convatec Group will grow its earnings by 1.8% every year for the next couple of years.
Next Steps:
For Convatec Group, there are three essential factors you should further examine:
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 CTEC 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 CTEC is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of CTEC? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
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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.
