In June 2019, National Beverage Corp. (NASDAQ:FIZZ) released its most recent earnings announcement, which indicated that the company faced a slight headwind with earnings deteriorating from US$150m to US$141m, a change of -6.0%. Below is a brief commentary on my key takeaways on how market analysts predict National Beverage’s earnings growth outlook over the next few years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
Analysts’ outlook for next year seems pessimistic, with earnings reducing by a double-digit -16%. In the next couple of years, earnings should continue to be below today’s level, with a decline of -18% in 2021, eventually reaching US$115m in 2022.
Although it is informative understanding the growth rate year by year relative to today’s value, it may be more valuable estimating the rate at which the earnings are moving on average every year. The benefit of this technique is that it ignores near term flucuations and accounts for the overarching direction of National Beverage’s earnings trajectory over time, be more volatile. To calculate this rate, I put a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is -11%. This means that, we can presume National Beverage will chip away at a rate of -11% every year for the next couple of years.
For National Beverage, I’ve compiled three essential factors 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 FIZZ 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 FIZZ is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of FIZZ? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
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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.