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After NZX Limited’s (NZSE:NZX) earnings announcement in December 2018, it seems that analyst forecasts are fairly optimistic, with earnings expected to grow by 3.1% in the upcoming year against the past 5-year average growth rate of -3.1%. With trailing-twelve-month net income at current levels of NZ$14m, we should see this rise to NZ$14m in 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
How is NZX going to perform in the near future?
Longer term expectations from the 3 analysts covering NZX’s stock is one of positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To understand the overall trajectory of NZX’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.
This results in an annual growth rate of 8.5% based on the most recent earnings level of NZ$14m to the final forecast of NZ$17m by 2022. EPS reaches NZ$0.064 in the final year of forecast compared to the current NZ$0.051 EPS today. In 2022, NZX’s profit margin will have expanded from 20% to 23%.
Future outlook is only one aspect when you’re building an investment case for a stock. For NZX, I’ve compiled three essential aspects 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 NZX 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 NZX is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of NZX? 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 email@example.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.