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Looking at Tejas Networks Limited’s (NSE:TEJASNET) recent earnings update on 31 March 2019, analyst consensus outlook seem pessimistic, with profits predicted to drop by 2.3% next year compared with the past 5-year average growth rate of 45%. Presently, with latest-twelve-month earnings at ₹1.5b, we should see this fall to ₹1.4b by 2020. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Tejas Networks in the longer term. For those interested in more of an analysis of the company, you can research its fundamentals here.
Check out our latest analysis for Tejas Networks
How will Tejas Networks perform in the near future?
The 4 analysts covering TEJASNET view its longer term outlook with a positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. 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 TEJASNET’s earnings growth over these next few years.
By 2022, TEJASNET’s earnings should reach ₹1.9b, from current levels of ₹1.5b, resulting in an annual growth rate of 7.8%. This leads to an EPS of ₹19.38 in the final year of projections relative to the current EPS of ₹16.13. This high rate of growth of revenue squeezes margins, as analysts predict an upcoming margin contraction from the current 16% to 14% by the end of 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For Tejas Networks, I’ve compiled three key factors 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 Tejas Networks 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 Tejas Networks is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Tejas Networks? 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 email@example.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.