In March 2018, Fuller Smith & Turner PLC (LON:FSTA) released its earnings update. Generally, it seems that analyst forecasts are fairly pessimistic, with earnings expected to decline by -4.1% in the upcoming year compared with the past 5-year average growth rate of 5.3%. Presently, with latest-twelve-month earnings at UK£36m, we should see this fall to UK£34m by 2019. Below is a brief commentary on the longer term outlook the market has for Fuller Smith & Turner. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
What can we expect from Fuller Smith & Turner in the longer term?
The longer term expectations from the 5 analysts of FSTA 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 FSTA’s earnings growth over these next few years.
By 2021, FSTA’s earnings should reach UK£38m, from current levels of UK£36m, resulting in an annual growth rate of 2.8%. This leads to an EPS of £0.70 in the final year of projections relative to the current EPS of £0.65. Earnings growth appears to be a result of a higher revenue growth of 3.7% outpacing cost increases. As revenues is expected to outpace earnings, analysts expect margins to contract from the current 8.9% to 8.4% by the end of 2021.
Future outlook is only one aspect when you’re building an investment case for a stock. For Fuller Smith & Turner, there are three important factors 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 Fuller Smith & Turner 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 Fuller Smith & Turner is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Fuller Smith & Turner? 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.