Alliance Aviation Services Limited’s (ASX:AQZ) released its most recent earnings update in June 2018, which signalled that the company experienced a minor headwind with earnings deteriorating from AU$18.55m to AU$18.11m, a change of -2.35%. Below, I’ve laid out key growth figures on how market analysts view Alliance Aviation Services’s earnings growth trajectory over the next few years and whether the future looks brighter. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
Analysts’ expectations for this coming year seems positive, with earnings increasing by a robust 20.38%. This growth seems to continue into the following year with rates reaching double digit 32.96% compared to today’s earnings, and finally hitting AU$25.60m by 2021.
While it is informative knowing the rate of growth each year relative to today’s figure, it may be more insightful estimating the rate at which the earnings are rising or falling on average every year. The pro of this method is that we can get a bigger picture of the direction of Alliance Aviation Services’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To compute 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 11.34%. This means, we can expect Alliance Aviation Services will grow its earnings by 11.34% every year for the next few years.
For Alliance Aviation Services, there are three essential aspects 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 AQZ 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 AQZ is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of AQZ? 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 firstname.lastname@example.org.