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In August 2018, The Character Group plc (LON:CCT) released its earnings update. Generally, analyst consensus outlook appear cautiously subdued, with profits predicted to rise by 10% next year against the higher past 5-year average growth rate of 12%. Presently, with latest-twelve-month earnings at UK£9.6m, we should see this growing to UK£11m by 2020. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Character Group in the longer term. For those interested in more of an analysis of the company, you can research its fundamentals here.
View our latest analysis for Character Group
How is Character Group going to perform in the near future?
The longer term expectations from the 2 analysts of CCT is tilted towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. I’ve plotted out each year’s earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of CCT’s earnings growth over these next few years.
By 2022, CCT’s earnings should reach UK£11m, from current levels of UK£9.6m, resulting in an annual growth rate of 5.9%. EPS reaches £0.51 in the final year of forecast compared to the current £0.46 EPS today. As revenues is expected to outpace earnings, analysts expect margins to contract from the current 9.0% to 8.1% by the end of 2022.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For Character Group, I’ve put together three key 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 Character Group 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 Character Group is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Character Group? 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.