Yahoo Finance ALS Limited (ASX:ALQ): Is It A Smart Long Term Opportunity?
After ALS Limited’s (ASX:ALQ) earnings announcement in September 2018, the consensus outlook from analysts appear fairly confident, as a 21% increase in profits is expected in the upcoming year, compared with the past 5-year average growth rate of 2.4%. Currently with trailing-twelve-month earnings of AU$66m, we can expect this to reach AU$80m by 2020. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for ALS in the longer term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
View our latest analysis for ALS
Exciting times ahead?
The longer term expectations from the 11 analysts of ALQ is tilted 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 get an idea of the overall earnings growth trend for ALQ, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
This results in an annual growth rate of 5.7% based on the most recent earnings level of AU$66m to the final forecast of AU$86m by 2022. This leads to an EPS of A$0.41 in the final year of projections relative to the current EPS of A$0.13. With a current profit margin of 4.5%, this movement will result in a margin of 5.3% by 2022.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For ALS, I’ve compiled three relevant factors you should further research:
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 ALS 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 ALS is currently mispriced by the market.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of ALS? 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.
