G4S plc (LON:GFS): What Can We Expect From This High Growth Stock?

G4S plc's (LSE:GFS) latest earnings update in December 2017 revealed that the company experienced a robust tailwind, eventuating to a double-digit earnings growth of 20.40%. Investors may find it useful to understand how market analysts predict G4S's earnings growth outlook over the next few years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings. Check out our latest analysis for G4S

Analysts' outlook for this coming year seems positive, with earnings climbing by a robust 14.25%. This growth seems to continue into the following year with rates arriving at double digit 29.86% compared to today’s earnings, and finally hitting UK£391.30M by 2021.

Although it is helpful to be aware of the rate of growth year by year relative to today’s value, it may be more valuable to gauge 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 better picture of the direction of G4S'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've inserted 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 13.47%. This means, we can anticipate G4S will grow its earnings by 13.47% every year for the next couple of years.

Next Steps:

For G4S, I've compiled three pertinent aspects you should look at:

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 GFS 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 GFS is currently mispriced by the market.
3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of GFS? 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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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.