CSL Limited (ASX:CSL): Are Analysts Bullish?

The most recent earnings announcement CSL Limited’s (ASX:CSL) released in June 2018 indicated that the company gained from a robust tailwind, eventuating to a double-digit earnings growth of 29.3%. Below, I’ve laid out key numbers on how market analysts predict CSL’s earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.

View our latest analysis for CSL

Analysts’ expectations for the coming year seems buoyant, with earnings climbing by a robust 13.5%. This growth seems to continue into the following year with rates reaching double digit 28.2% compared to today’s earnings, and finally hitting US$2.46b by 2021.

ASX:CSL Future Profit August 29th 18

While it is useful to be aware of the growth rate year by year relative to today’s figure, it may be more insightful to gauge the rate at which the business is rising or falling every year, on average. The benefit of this method is that it ignores near term flucuations and accounts for the overarching direction of CSL’s earnings trajectory over time, which may be more relevant for long term investors. To compute 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 10.0%. This means, we can assume CSL will grow its earnings by 10.0% every year for the next few years.

Next Steps:

For CSL, I’ve compiled three fundamental factors you should further research:

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 CSL 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 CSL is currently mispriced by the market.

3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of CSL? 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.