Will DCB Bank Limited's (NSE:DCBBANK) Earnings Grow In The Next Couple Of Years?
DCB Bank Limited's (NSE:DCBBANK) most recent earnings announcement in March 2019 revealed that the company experienced a strong tailwind, eventuating to a double-digit earnings growth of 33%. Today I want to provide a brief commentary on how market analysts view DCB Bank's earnings growth outlook over the next couple of years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
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Check out our latest analysis for DCB Bank
Analysts' expectations for next year seems buoyant, with earnings rising by a robust 27%. This growth seems to continue into the following year with rates reaching double digit 61% compared to today’s earnings, and finally hitting ₹6.2b by 2022.
Although it’s helpful to be aware of the growth year by year relative to today’s figure, it may be more beneficial determining the rate at which the company is moving every year, on average. The advantage of this method is that we can get a bigger picture of the direction of DCB Bank'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 inserted 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 19%. This means that, we can assume DCB Bank will grow its earnings by 19% every year for the next few years.
Next Steps:
For DCB Bank, there are three fundamental aspects 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 DCBBANK 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 DCBBANK is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of DCBBANK? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
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If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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.
