What Do Analysts Think About The Future Of GR Engineering Services Limited's (ASX:GNG)?

Since GR Engineering Services Limited (ASX:GNG) released its earnings in June 2018, analyst forecasts appear to be pessimistic, with earnings expected to decline by -7.7% in the upcoming year relative to the past 5-year average growth rate of 3.5%. With trailing-twelve-month net income at current levels of AU$12m, the consensus growth rate suggests that earnings will decline to AU$11m by 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.

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How will GR Engineering Services perform in the near future?

The longer term expectations from the 2 analysts of GNG is tilted towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To understand the overall trajectory of GNG's earnings growth over these next fews years, I've fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.

From the current net income level of AU$12m and the final forecast of AU$17m by 2022, the annual rate of growth for GNG’s earnings is 18%. EPS reaches A$0.14 in the final year of forecast compared to the current A$0.076 EPS today. In 2022, GNG's profit margin will have expanded from 4.1% to 6.0%.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For GR Engineering Services, I've compiled three pertinent aspects you should further examine:

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 GR Engineering Services 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 GR Engineering Services is currently mispriced by the market.
3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of GR Engineering Services? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.

Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.