In March 2018, VA Tech Wabag Limited (NSE:WABAG) released its earnings update. Generally, it seems that analyst forecasts are fairly optimistic, with profits predicted to increase by 36.89% next year against the past 5-year average growth rate of 7.17%. With trailing-twelve-month net income at current levels of ₹1.32b, we should see this rise to ₹1.80b in 2019. Below is a brief commentary on the longer term outlook the market has for VA Tech Wabag. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
How is VA Tech Wabag going to perform in the near future?
The 19 analysts covering WABAG view its longer term outlook with a 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 WABAG’s earnings growth over these next few years.
By 2021, WABAG’s earnings should reach ₹1.96b, from current levels of ₹1.32b, resulting in an annual growth rate of 20.13%. This leads to an EPS of ₹36.01 in the final year of projections relative to the current EPS of ₹24.08. Earnings growth appears to be a result of cost cutting activities, as revenues is expected to grow much slower than earnings. With a current profit margin of 3.80%, this movement will result in a margin of 4.18% by 2021.
Future outlook is only one aspect when you’re building an investment case for a stock. For VA Tech Wabag, there are three pertinent factors you should look at:
- 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 VA Tech Wabag 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 VA Tech Wabag is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of VA Tech Wabag? 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 email@example.com.