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In December 2018, The Unite Group plc (LON:UTG) released its earnings update. Generally, the consensus outlook from analysts appear bearish, with profits predicted to drop by 2.2% next year relative to the past 5-year average growth rate of 14%. Currently with a trailing-twelve-month profit of UK£236m, the consensus growth rate suggests that earnings will drop to UK£231m by 2020. Below is a brief commentary on the longer term outlook the market has for Unite Group. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
Exciting times ahead?
Longer term expectations from the 2 analysts covering UTG’s stock is one of positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly 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 UTG’s earnings growth over these next few years.
From the current net income level of UK£236m and the final forecast of UK£247m by 2022, the annual rate of growth for UTG’s earnings is 1.5%. This leads to an EPS of £0.98 in the final year of projections relative to the current EPS of £0.91. As revenues is expected to outpace earnings, analysts expect margins to contract from the current 139% to 132% by the end of 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For Unite Group, there are three pertinent 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 Unite 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 Unite Group is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Unite 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!
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.