LiveChat Software S.A. (WSE:LVC): Immense Growth Potential?

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In December 2018, LiveChat Software S.A. (WSE:LVC) released its earnings update. Generally, the consensus outlook from analysts appear somewhat bearish, with earnings expected to grow by 11% in the upcoming year relative to the higher past 5-year average growth rate of 32%. By 2020, we can expect LiveChat Software’s bottom line to reach zł54m, a jump from the current trailing-twelve-month of zł48m. Below is a brief commentary on the longer term outlook the market has for LiveChat Software. For those keen to understand more about other aspects of the company, you can research its fundamentals here.

See our latest analysis for LiveChat Software

How will LiveChat Software perform in the near future?

Longer term expectations from the 4 analysts covering LVC’s stock is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To get an idea of the overall earnings growth trend for LVC, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.

WSE:LVC Past and Future Earnings, June 5th 2019
WSE:LVC Past and Future Earnings, June 5th 2019

This results in an annual growth rate of 4.8% based on the most recent earnings level of zł48m to the final forecast of zł59m by 2022. This leads to an EPS of PLN2.87 in the final year of projections relative to the current EPS of PLN1.88. Analysts are predicting this high revenue growth to squeeze profit margins over time, from 54% to 50% by the end of 2022.

Next Steps:

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