MyState Limited (ASX:MYS): Will The Growth Last?

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In December 2018, MyState Limited (ASX:MYS) announced its earnings update. Overall, analysts seem fairly confident, with profits predicted to increase by 2.7% next year relative to the past 5-year average growth rate of 0.4%. Currently with trailing-twelve-month earnings of AU$31m, we can expect this to reach AU$32m by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. For those interested in more of an analysis of the company, you can research its fundamentals here.

Check out our latest analysis for MyState

Exciting times ahead?

Longer term expectations from the 4 analysts covering MYS’s stock is one of positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. I’ve plotted out each year’s earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of MYS’s earnings growth over these next few years.

ASX:MYS Past and Future Earnings, June 6th 2019
ASX:MYS Past and Future Earnings, June 6th 2019

This results in an annual growth rate of 4.4% based on the most recent earnings level of AU$31m to the final forecast of AU$35m by 2022. This leads to an EPS of A$0.36 in the final year of projections relative to the current EPS of A$0.35. With a current profit margin of 25%, this movement will result in a margin of 26% by 2022.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For MyState, I’ve put together three relevant factors you should further research:

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