The most recent earnings announcement Speedway Motorsports, Inc.’s (NYSE:TRK) released in December 2018 signalled that the company faced a substantial headwind with earnings declining by -73%. Below, I’ve laid out key numbers on how market analysts view Speedway Motorsports’s earnings growth trajectory over the next couple of years and whether the future looks brighter. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
Market analysts’ prospects for next year seems pessimistic, with earnings decreasing by -4.1%. In the next couple of years, earnings should continue to be below today’s level, with a decrease of -3.7% in 2021, eventually reaching US$39m in 2022.
Although it is useful to understand the growth each year relative to today’s value, it may be more beneficial to evaluate the rate at which the earnings are growing on average every year. The benefit of this method is that it removes the impact of near term flucuations and accounts for the overarching direction of Speedway Motorsports’s earnings trajectory over time, which may be more relevant for long term investors. 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 -0.007%. This means, we can expect Speedway Motorsports will chip away at a rate of -0.007% every year for the next couple of years.
For Speedway Motorsports, I’ve put together three important factors you should look at:
- 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 TRK 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 TRK is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of TRK? 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.