Yahoo Finance Ricardo plc (LON:RCDO): What’s The Analyst Consensus Outlook?
In June 2018, Ricardo plc (LON:RCDO) released its most recent earnings announcement, which revealed that the business endured a major headwind with earnings falling by -24%. Below is a brief commentary on my key takeaways on how market analysts predict Ricardo’s earnings growth trajectory over the next couple of years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
See our latest analysis for Ricardo
Analysts’ outlook for this coming year seems positive, with earnings rising by a robust 37%. This growth seems to continue into the following year with rates arriving at double digit 59% compared to today’s earnings, and finally hitting UK£33m by 2021.
Although it is informative knowing the growth year by year relative to today’s figure, it may be more insightful estimating the rate at which the earnings are moving on average every year. The benefit of this approach is that it ignores near term flucuations and accounts for the overarching direction of Ricardo’s earnings trajectory over time, which may be more relevant for long term investors. To calculate 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 19%. This means that, we can anticipate Ricardo will grow its earnings by 19% every year for the next few years.
Next Steps:
For Ricardo, there are three important 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 RCDO 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 RCDO is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of RCDO? 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 past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
