Yahoo Finance What Should You Know About Derwent London Plc’s (LON:DLN) Long Term Outlook?
Derwent London Plc’s (LON:DLN) most recent earnings update in December 2017 confirmed that the business benefited from a major tailwind, more than doubling its earnings from the prior year. Below, I’ve presented key growth figures on how market analysts predict Derwent London’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. View out our latest analysis for Derwent London
Analysts’ outlook for the upcoming year seems pessimistic, with earnings reducing by a double-digit -32.48%. In the next couple of years, earnings are predicted to continue to be below today’s level, with a decline of -13.19% in 2020, eventually reaching UK£272.59m in 2021.
While it is helpful to understand the growth each year relative to today’s figure, it may be more insightful to estimate the rate at which the business is growing every year, on average. The pro of this approach is that we can get a bigger picture of the direction of Derwent London’s earnings trajectory over the long run, irrespective of near term fluctuations, be more volatile. 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 -5.47%. This means that, we can assume Derwent London will chip away at a rate of -5.47% every year for the next couple of years.
Next Steps:
For Derwent London, I’ve compiled three fundamental aspects 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 DLN 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 DLN is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of DLN? 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.
