Since Wagners Holding Company Limited (ASX:WGN) released its earnings in December 2018, analyst consensus outlook seem bearish, as a 12% fall in profits is expected in the upcoming year relative to the past 5-year average growth rate of 37%. Currently with a trailing-twelve-month profit of AU$25m, the consensus growth rate suggests that earnings will drop to AU$22m by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
Exciting times ahead?
Over the next three years, it seems the consensus view of the 4 analysts covering WGN is skewed towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To get an idea of the overall earnings growth trend for WGN, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
This results in an annual growth rate of 20% based on the most recent earnings level of AU$25m to the final forecast of AU$36m by 2022. However, if we exclude extraordinary items from net income, we see that earnings is projected to fall over time, resulting in an EPS of A$0.14 in the final year of forecast compared to the current A$0.17 EPS today. In 2022, WGN’s profit margin will have expanded from 11% to 11%.
Future outlook is only one aspect when you’re building an investment case for a stock. For Wagners Holding, I’ve put together three essential aspects you should further research:
- 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 Wagners Holding 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 Wagners Holding is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Wagners Holding? 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.