After Dechra Pharmaceuticals PLC's (LON:DPH) earnings announcement on 30 June 2019, analyst consensus outlook appear vastly optimistic, with earnings expected to grow by a high double-digit of 52% in the upcoming year, relative to the historical 5-year average growth rate of 14%. Currently with trailing-twelve-month earnings of UK£31m, we can expect this to reach UK£47m by 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for Dechra Pharmaceuticals in the longer term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
What can we expect from Dechra Pharmaceuticals in the longer term?
Over the next three years, it seems the consensus view of the 8 analysts covering DPH is skewed towards the positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly 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 24% based on the most recent earnings level of UK£31m to the final forecast of UK£76m by 2022. EPS reaches £0.73 in the final year of forecast compared to the current £0.30 EPS today. In 2022, DPH's profit margin will have expanded from 6.4% to 12%.
Future outlook is only one aspect when you're building an investment case for a stock. For Dechra Pharmaceuticals, I've compiled three important aspects you should look at:
- 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 Dechra Pharmaceuticals 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 Dechra Pharmaceuticals is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Dechra Pharmaceuticals? 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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