What Should You Know About Rathbone Brothers Plc’s (LON:RAT) Future?

Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!

In December 2018, Rathbone Brothers Plc (LON:RAT) released its earnings update. Generally, the consensus outlook from analysts appear fairly confident, with profits predicted to increase by 20% next year compared with the past 5-year average growth rate of 7.6%. Currently with trailing-twelve-month earnings of UK£46m, we can expect this to reach UK£56m by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.

View our latest analysis for Rathbone Brothers

What can we expect from Rathbone Brothers in the longer term?

Longer term expectations from the 7 analysts covering RAT’s stock is one of positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To get an idea of the overall earnings growth trend for RAT, 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.

LSE:RAT Past and Future Earnings, July 9th 2019
LSE:RAT Past and Future Earnings, July 9th 2019

From the current net income level of UK£46m and the final forecast of UK£73m by 2022, the annual rate of growth for RAT’s earnings is 15%. This leads to an EPS of £1.36 in the final year of projections relative to the current EPS of £0.89. With a current profit margin of 14%, this movement will result in a margin of 19% by 2022.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For Rathbone Brothers, there are three important factors 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 Rathbone Brothers 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 Rathbone Brothers is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Rathbone Brothers? 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.