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Will Tate & Lyle plc's (LON:TATE) Earnings Grow Over The Next Year?

Simply Wall St

In March 2019, Tate & Lyle plc (LON:TATE) released its earnings update. Generally, the consensus outlook from analysts appear fairly confident, with earnings expected to grow by 24% in the upcoming year against the past 5-year average growth rate of 16%. By 2020, we can expect Tate & Lyle’s bottom line to reach UK£225m, a jump from the current trailing-twelve-month of UK£181m. I will provide a brief commentary around the figures and analyst expectations in the near term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.

View our latest analysis for Tate & Lyle

What can we expect from Tate & Lyle in the longer term?

The longer term view from the 9 analysts covering TATE 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. I've plotted out each year's earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of TATE's earnings growth over these next few years.

LSE:TATE Past and Future Earnings, September 7th 2019

From the current net income level of UK£181m and the final forecast of UK£253m by 2022, the annual rate of growth for TATE’s earnings is 9.6%. This leads to an EPS of £0.53 in the final year of projections relative to the current EPS of £0.39. With a current profit margin of 6.6%, this movement will result in a margin of 8.5% by 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Tate & Lyle, I've compiled three pertinent aspects you should look at:

  1. 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.
  2. Valuation: What is Tate & Lyle 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 Tate & Lyle is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Tate & Lyle? 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.