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In March 2019, FBD Holdings plc (ISE:EG7) released its most recent earnings announcement, which revealed that the business experienced a minor headwind with earnings deteriorating from €43m to €42m, a change of -0.7%. Below is my commentary, albeit very simple and high-level, on how market analysts perceive FBD Holdings's earnings growth outlook over the next few years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
Check out our latest analysis for FBD Holdings
Market analysts' consensus outlook for next year seems pessimistic, with earnings decreasing by a double-digit -13%. Over the medium term, earnings are predicted to continue to be below today's level, with a decline of -15% in 2021, eventually reaching €36m in 2022.
Even though it is useful to understand the growth each year relative to today’s level, it may be more valuable to determine the rate at which the company is moving on average every year. The benefit of this technique is that it removes the impact of near term flucuations and accounts for the overarching direction of FBD Holdings's earnings trajectory over time, be more volatile. To compute this rate, I've inserted a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is -4.7%. This means, we can expect FBD Holdings will chip away at a rate of -4.7% every year for the next couple of years.
Next Steps:
For FBD Holdings, I've put together three important factors you should further examine:
- 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 EG7 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 EG7 is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of EG7? 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.