How Do Analysts See SEEK Limited (ASX:SEK) Performing Over The Next Few Years?

In August 2019, SEEK Limited (ASX:SEK) released its most recent earnings announcement, which indicated that the business gained from a substantial tailwind, more than doubling its earnings from the prior year. Today I want to provide a brief commentary on how market analysts predict SEEK’s earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.

See our latest analysis for SEEK

Market analysts’ consensus outlook for next year seems pessimistic, with earnings declining by a double-digit -17%. However, the next few years show a contrast, with earnings growth becoming positive in 2021, with the bottom line increasing to AU$226m in 2022.

ASX:SEK Past and Future Earnings, August 28th 2019
ASX:SEK Past and Future Earnings, August 28th 2019

Even though it’s useful to be aware of the growth rate year by year relative to today’s value, it may be more valuable to analyze the rate at which the earnings are rising or falling every year, on average. The pro of this method is that it removes the impact of near term flucuations and accounts for the overarching direction of SEEK’s earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I put a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 13%. This means, we can presume SEEK will grow its earnings by 13% every year for the next few years.

Next Steps:

For SEEK, I’ve put together three important 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 SEK 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 SEK is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of SEK? 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.