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Assura Plc’s (LON:AGR) most recent earnings announcement in March 2019 indicated that the business experienced a strong tailwind, eventuating to a double-digit earnings growth of 17%. Today I want to provide a brief commentary on how market analysts view Assura’s earnings growth outlook over the next few years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
Analysts’ expectations for next year seems positive, with earnings expanding by a robust 39%. This growth seems to continue into the following year with rates reaching double digit 42% compared to today’s earnings, and finally hitting UK£122m by 2022.
Even though it’s useful to understand the growth rate each year relative to today’s level, it may be more beneficial to estimate the rate at which the business is rising or falling every year, on average. The pro of this approach is that we can get a bigger picture of the direction of Assura’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 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 12%. This means that, we can anticipate Assura will grow its earnings by 12% every year for the next couple of years.
For Assura, there are three important factors you should look at:
- 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 AGR 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 AGR is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of AGR? 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 firstname.lastname@example.org. 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.