After Speedway Motorsports, Inc.’s (NYSE:TRK) earnings announcement on 31 December 2018, it seems that analyst forecasts are fairly bearish, as a -4.1% fall in profits is expected in the upcoming year relative to the past 5-year average growth rate of 39%. Presently, with latest-twelve-month earnings at US$40m, we should see this fall to US$39m by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
What can we expect from Speedway Motorsports in the longer term?
The longer term view from the 1 analysts covering TRK is one of negative sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. 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.
From the current net income level of US$40m and the final forecast of US$39m by 2022, the annual rate of growth for TRK’s earnings is -0.007%. EPS reaches $0.98 in the final year of forecast compared to the current $0.99 EPS today. The main reason for TRK’s earnings contraction is cost growth exceeding top-line growth of 1.7% in the next three years. Furthermore, the current 8.8% margin is expected to contract to 8.3% by the end of 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For Speedway Motorsports, I’ve put together three key aspects 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 Speedway Motorsports 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 Speedway Motorsports is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Speedway Motorsports? 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.