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The Go-Ahead Group plc (LON:GOG): What Are The Future Prospects?

Simply Wall St

On 29 June 2019, The Go-Ahead Group plc (LON:GOG) announced its earnings update. Overall, analysts seem fairly confident, with profits predicted to increase by 25% next year against the past 5-year average growth rate of 2.7%. Presently, with latest-twelve-month earnings at UK£59m, we should see this growing to UK£74m by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.

See our latest analysis for Go-Ahead Group

What can we expect from Go-Ahead Group in the longer term?

The longer term view from the 6 analysts covering GOG is one of positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To understand the overall trajectory of GOG's earnings growth over these next fews years, I've fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.

LSE:GOG Past and Future Earnings, September 7th 2019

This results in an annual growth rate of 9.9% based on the most recent earnings level of UK£59m to the final forecast of UK£73m by 2022. This leads to an EPS of £1.68 in the final year of projections relative to the current EPS of £1.37. In 2022, GOG's profit margin will have expanded from 1.5% to 4.1%.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Go-Ahead Group, I've put together three important aspects 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 Go-Ahead Group 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 Go-Ahead Group is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Go-Ahead Group? 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.