Yahoo Finance Spirax-Sarco Engineering plc (LON:SPX): Earnings To Drop Next Year
Looking at Spirax-Sarco Engineering plc's (LON:SPX) recent earnings update on 30 June 2019, it seems that analyst forecasts are fairly pessimistic, with earnings expected to decline by 19% in the upcoming year compared with the past 5-year average growth rate of 20%. With trailing-twelve-month net income at current levels of UK£223m, the consensus growth rate suggests that earnings will decline to UK£181m by 2020. Below is a brief commentary on the longer term outlook the market has for Spirax-Sarco Engineering. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
Check out our latest analysis for Spirax-Sarco Engineering
Exciting times ahead?
Longer term expectations from the 14 analysts covering SPX’s stock is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. 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 SPX's earnings growth over these next few years.
From the current net income level of UK£223m and the final forecast of UK£211m by 2022, the annual rate of growth for SPX’s earnings is 5.5%. However, if we exclude extraordinary items from net income, we see that earnings is projected to fall over time, resulting in an EPS of £2.87 in the final year of forecast compared to the current £3.03 EPS today. However, the near term margins may change heading into 2022, from the current levels of 19% to 16%.
Next Steps:
Future outlook is only one aspect when you're building an investment case for a stock. For Spirax-Sarco Engineering, I've put together three key 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 Spirax-Sarco Engineering 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 Spirax-Sarco Engineering is currently mispriced by the market.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Spirax-Sarco Engineering? 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.
