What Do Analysts Think About Stagecoach Group plc's (LON:SGC) Growth?

In April 2018, Stagecoach Group plc (LON:SGC) announced its earnings update. Overall, analysts seem fairly confident, as a 43.49% increase in profits is expected in the upcoming year, relative to the past 5-year average growth rate of -16.12%. With trailing-twelve-month net income at current levels of UK£70.50m, we should see this rise to UK£101.16m in 2019. Below is a brief commentary around Stagecoach Group's earnings outlook going forward, which may give you a sense of market sentiment for the company. For those keen to understand more about other aspects of the company, you can research its fundamentals here.

View our latest analysis for Stagecoach Group

How will Stagecoach Group perform in the near future?

The longer term view from the 9 analysts covering SGC is one of negative sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To reduce the year-on-year volatility of analyst earnings forecast, I've inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.

By 2021, SGC's earnings should reach UK£82.99m, from current levels of UK£70.50m, resulting in an annual growth rate of -0.21%. However, if we exclude extraordinary items from earnings, we see that the profits is predicted to rise over time, resulting in an EPS of £0.14 in the final year of forecast compared to the current £0.12 EPS today. The main reason for SGC’s earnings contraction is revenue declining at an average annual rate of -10.11%. With margins currently sitting at 2.18%, this fall in revenues is expected to cause margin expansion to 3.51% by 2021.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Stagecoach Group, I've compiled three relevant 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 Stagecoach 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 Stagecoach Group is currently mispriced by the market.
3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Stagecoach 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!

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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.