In December 2018, The Timken Company (NYSE:TKR) announced its earnings update. Overall, analysts seem cautiously optimistic, as upcoming earnings growth is expected to be 20% next year, similar to the range of average earnings growth for the past five years of 19% per year. Presently, with latest-twelve-month earnings at US$303m, we should see this growing to US$364m by 2020. Below is a brief commentary on the longer term outlook the market has for Timken. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
How will Timken perform in the near future?
The 8 analysts covering TKR 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. To get an idea of the overall earnings growth trend for TKR, 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.
By 2022, TKR's earnings should reach US$450m, from current levels of US$303m, resulting in an annual growth rate of 12%. EPS reaches $6.2 in the final year of forecast compared to the current $3.93 EPS today. Margins are currently sitting at 8.5%, which is expected to expand to 11% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Timken, I've compiled three important 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 Timken 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 Timken is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Timken? 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.