Goodman Group’s (ASX:GMG) announced its latest earnings update in June 2018, which showed that the company experienced a strong tailwind, leading to a double-digit earnings growth of 41%. Below, I’ve laid out key growth figures on how market analysts perceive Goodman 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.
Market analysts’ prospects for the coming year seems pessimistic, with earnings falling by a double-digit -18%. Beyond this, earnings are predicted to continue to be below today’s level, with a decline of -12% in 2020, eventually reaching AU$970m in 2021.
Although it is informative understanding the growth year by year relative to today’s level, it may be more insightful determining the rate at which the earnings are rising or falling on average every year. The benefit of this technique is that we can get a bigger picture of the direction of Goodman 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’ve appended 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 0.003%. This means, we can expect Goodman Group will grow its earnings by 0.003% every year for the next few years.
For Goodman Group, I’ve put together three fundamental factors 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 GMG 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 GMG is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of GMG? 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 email@example.com.