Yahoo Finance What Should Investors Know About Cochlear Limited’s (ASX:COH) Long Term Outlook?
The latest earnings announcement Cochlear Limited (ASX:COH) released in June 2018 signalled that the business experienced a small tailwind, eventuating to a single-digit earnings growth of 9.9%. Below is a brief commentary on my key takeaways on how market analysts predict Cochlear’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.
Check out our latest analysis for Cochlear
Market analysts’ consensus outlook for this coming year seems optimistic, with earnings climbing by a robust 12%. This growth seems to continue into the following year with rates arriving at double digit 26% compared to today’s earnings, and finally hitting AU$346m by 2021.
Although it’s informative understanding the growth each year relative to today’s level, it may be more valuable to analyze the rate at which the earnings are growing every year, on average. The pro of this method is that we can get a bigger picture of the direction of Cochlear’s earnings trajectory over the long run, irrespective of near term fluctuations, 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 11%. This means, we can anticipate Cochlear will grow its earnings by 11% every year for the next few years.
Next Steps:
For Cochlear, I’ve compiled three essential 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 COH 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 COH is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of COH? 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.
