Yahoo Finance SDL plc (LON:SDL): What Does The Future Look Like?
After SDL plc's (LON:SDL) earnings announcement on 31 December 2018, analysts seem highly optimistic, with profits predicted to ramp up by an impressive 59% next year, similar to the range of average earnings growth for the past five years of 59% per year. Currently with trailing-twelve-month earnings of UK£15m, we can expect this to reach UK£24m by 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for SDL in the longer term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
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See our latest analysis for SDL
How will SDL perform in the near future?
The longer term view from the 5 analysts covering SDL is one of positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To understand the overall trajectory of SDL's earnings growth over these next fews years, I've fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
This results in an annual growth rate of 21% based on the most recent earnings level of UK£15m to the final forecast of UK£30m by 2022. EPS reaches £0.33 in the final year of forecast compared to the current £0.17 EPS today. Margins are currently sitting at 4.6%, which is expected to expand to 7.4% by 2022.
Next Steps:
Future outlook is only one aspect when you're building an investment case for a stock. For SDL, 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 SDL 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 SDL is currently mispriced by the market.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of SDL? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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.
