What Should You Know About ZAGG Inc’s (NASDAQ:ZAGG) Earnings Trajectory?

ZAGG Inc’s (NASDAQ:ZAGG) most recent earnings update in December 2018 showed that the business experienced a significant tailwind, more than doubling its earnings from the prior year. Investors may find it useful to understand how market analysts predict ZAGG’s earnings growth outlook over the next few years and whether the future looks even brighter than the past. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.

See our latest analysis for ZAGG

Market analysts’ prospects for the coming year seems optimistic, with earnings growing by a robust 13%. This growth seems to continue into the following year with rates reaching double digit 17% compared to today’s earnings, and finally hitting US$49m by 2022.

NasdaqGS:ZAGG Past and Future Earnings, March 25th 2019
NasdaqGS:ZAGG Past and Future Earnings, March 25th 2019

While it’s useful to understand the growth each year relative to today’s value, it may be more beneficial determining the rate at which the business is moving every year, on average. The advantage of this method is that we can get a better picture of the direction of ZAGG’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate 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 6.0%. This means that, we can assume ZAGG will grow its earnings by 6.0% every year for the next couple of years.

Next Steps:

For ZAGG, I’ve put together three key factors you should look at:

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