The latest earnings announcement Warpaint London PLC (LON:W7L) released in April 2019 confirmed that the business faced a major headwind with earnings declining by -35%. Below is a brief commentary on my key takeaways on how market analysts perceive Warpaint London’s earnings growth trajectory over the next few 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.
Analysts’ outlook for the coming year seems positive, with earnings increasing by a significant 54%. This high growth in earnings is expected to continue, bringing the bottom line up to UK£8.5m by 2022.
Even though it is informative knowing the rate of growth each year relative to today’s level, it may be more insightful determining the rate at which the business is moving every year, on average. The benefit of this method is that we can get a better picture of the direction of Warpaint London’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate 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 27%. This means that, we can anticipate Warpaint London will grow its earnings by 27% every year for the next few years.
For Warpaint London, I’ve compiled three fundamental aspects 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 W7L 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 W7L is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of W7L? 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.