What Should You Know About Hilton Food Group plc’s (LON:HFG) Long Term Outlook?

Hilton Food Group plc’s (LON:HFG) most recent earnings update in April 2019 signalled that the company benefited from a robust tailwind, eventuating to a double-digit earnings growth of 31%. Below, I’ve laid out key numbers on how market analysts predict Hilton Food Group’s earnings growth trajectory 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.

See our latest analysis for Hilton Food Group

Market analysts’ prospects for this coming year seems rather muted, with earnings expanding by a single digit 7.4%. The growth outlook in the following year seems much more buoyant with rates reaching double digit 20% compared to today’s earnings, and finally hitting UK£45m by 2022.

LSE:HFG Past and Future Earnings, August 14th 2019
LSE:HFG Past and Future Earnings, August 14th 2019

Even though it is useful to be aware of the growth rate year by year relative to today’s figure, it may be more insightful to evaluate the rate at which the business is growing on average every year. The advantage of this approach is that it ignores near term flucuations and accounts for the overarching direction of Hilton Food Group’s earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I’ve appended a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 11%. This means that, we can assume Hilton Food Group will grow its earnings by 11% every year for the next few years.

Next Steps:

For Hilton Food Group, I’ve compiled three pertinent aspects you should further examine:

  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 HFG 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 HFG is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of HFG? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.