The most recent earnings update General Insurance Corporation of India's (NSE:GICRE) released in August 2019 signalled that the business experienced a immense headwind with earnings declining by -12%. Below is my commentary, albeit very simple and high-level, on how market analysts perceive General Insurance of India's earnings growth trajectory over the next couple of years and whether the future looks brighter. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
Market analysts' prospects for the coming year seems buoyant, with earnings increasing by a robust 23%. This growth seems to continue into the following year with rates arriving at double digit 51% compared to today’s earnings and decreases to ₹39b by 2022.
Even though it is useful to be aware of the rate of growth each year relative to today’s figure, it may be more valuable estimating the rate at which the earnings are rising or falling every year, on average. The benefit of this technique is that we can get a better picture of the direction of General Insurance of India's earnings trajectory over the long run, irrespective of near term fluctuations, be more volatile. 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 13%. This means, we can expect General Insurance of India will grow its earnings by 13% every year for the next couple of years.
For General Insurance of India, I've put together three fundamental factors you should further examine:
- Valuation: What is GICRE 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 GICRE is currently mispriced by the market.
- Future Earnings: How does GICRE's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of GICRE? 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 firstname.lastname@example.org. 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.