Looking at Auswide Bank Ltd’s (ASX:ABA) earnings update on 30 June 2019, it seems that analyst forecasts are fairly in-line with historical trends, with earnings growth rate expected to be 6.1% in the upcoming year, relative to the past five-year average earnings growth of 6.7% per year. With trailing-twelve-month net income at current levels of AU$17m, we should see this rise to AU$18m in 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.
What can we expect from Auswide Bank in the longer term?
Longer term expectations from the 2 analysts covering ABA’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 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.
This results in an annual growth rate of 6.8% based on the most recent earnings level of AU$17m to the final forecast of AU$21m by 2022. EPS reaches A$0.50 in the final year of forecast compared to the current A$0.41 EPS today. With a current profit margin of 24%, this movement will result in a margin of 26% by 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For Auswide Bank, there are three key aspects you should look at:
- 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 Auswide Bank 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 Auswide Bank is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Auswide Bank? 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.