What Should Investors Know About NZX Limited’s (NZSE:NZX) Growth?

After NZX Limited’s (NZSE:NZX) earnings announcement in December 2018, analysts seem fairly confident, as a 3.1% increase in profits is expected in the upcoming year, relative to the past 5-year average growth rate of -3.1%. Presently, with latest-twelve-month earnings at NZ$14m, we should see this growing to NZ$14m by 2020. Below is a brief commentary around NZX’s earnings outlook going forward, which may give you a sense of market sentiment for the company. For those keen to understand more about other aspects of the company, you can research its fundamentals here.

See our latest analysis for NZX

What can we expect from NZX in the longer term?

The longer term expectations from the 3 analysts of NZX is tilted towards the positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To reduce the year-on-year volatility of analyst earnings forecast, I’ve inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.

NZSE:NZX Past and Future Earnings, August 9th 2019
NZSE:NZX Past and Future Earnings, August 9th 2019

By 2022, NZX’s earnings should reach NZ$17m, from current levels of NZ$14m, resulting in an annual growth rate of 8.5%. EPS reaches NZ$0.064 in the final year of forecast compared to the current NZ$0.051 EPS today. With a current profit margin of 20%, this movement will result in a margin of 23% by 2022.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For NZX, I’ve compiled three relevant aspects you should further examine:

  1. 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.
  2. Valuation: What is NZX 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 NZX is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of NZX? 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 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.