Credit Corp Group Limited’s (ASX:CCP) most recent earnings update in July 2019 indicated that the company benefited from a slight tailwind, eventuating to a single-digit earnings growth of 9.3%. Below, I’ve laid out key numbers on how market analysts predict Credit Corp Group’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.
Analysts’ expectations for next year seems buoyant, with earnings increasing by a robust 19%. This growth seems to continue into the following year with rates arriving at double digit 37% compared to today’s earnings, and finally hitting AU$101m by 2022.
Although it’s informative understanding the growth each year relative to today’s figure, it may be more beneficial to gauge the rate at which the business is rising or falling on average every year. The benefit of this technique is that we can get a better picture of the direction of Credit Corp Group’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 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 12%. This means that, we can expect Credit Corp Group will grow its earnings by 12% every year for the next few years.
For Credit Corp Group, there are three fundamental factors 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 CCP 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 CCP is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of CCP? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
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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.