Will Topps Tiles Plc’s (LON:TPT) Earnings Grow In The Next 12 Months?

On 29 September 2018, Topps Tiles Plc (LON:TPT) announced its earnings update. Overall, it seems that analyst forecasts are fairly optimistic, as a 33% increase in profits is expected in the upcoming year, against the past 5-year average growth rate of 1.2%. Currently with trailing-twelve-month earnings of UK£9.7m, we can expect this to reach UK£13m by 2019. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Topps Tiles in the longer term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.

View our latest analysis for Topps Tiles

How will Topps Tiles perform in the near future?

Over the next three years, it seems the consensus view of the 4 analysts covering TPT is skewed towards the positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To understand the overall trajectory of TPT’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.

LSE:TPT Future Profit December 8th 18
LSE:TPT Future Profit December 8th 18

This results in an annual growth rate of 10% based on the most recent earnings level of UK£9.7m to the final forecast of UK£14m by 2021. This leads to an EPS of £0.070 in the final year of projections relative to the current EPS of £0.050. Margins are currently sitting at 4.5%, which is expected to expand to 6.1% by 2021.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For Topps Tiles, I’ve put together three important aspects you should further research:

  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 Topps Tiles 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 Topps Tiles is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Topps Tiles? 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.