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AMA Group Limited (ASX:AMA): Poised For Long Term Success?

Simply Wall St

After AMA Group Limited's (ASX:AMA) earnings announcement on 30 June 2019, analyst consensus outlook appear cautiously optimistic, with profits predicted to increase by 45% next year compared with the past 5-year average growth rate of 25%. Presently, with latest-twelve-month earnings at AU$22m, we should see this growing to AU$31m by 2020. Below is a brief commentary on the longer term outlook the market has for AMA Group. Investors wanting to learn more about other aspects of the company should research its fundamentals here.

See our latest analysis for AMA Group

How is AMA Group going to perform in the near future?

Over the next three years, it seems the consensus view of the 5 analysts covering AMA is skewed towards the positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To get an idea of the overall earnings growth trend for AMA, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.

ASX:AMA Past and Future Earnings, August 27th 2019

This results in an annual growth rate of 24% based on the most recent earnings level of AU$22m to the final forecast of AU$47m by 2022. EPS reaches A$0.099 in the final year of forecast compared to the current A$0.040 EPS today. With a current profit margin of 3.5%, this movement will result in a margin of 4.6% by 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For AMA Group, I've put together three fundamental factors you should further research:

  1. Valuation: What is AMA 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 AMA Group is currently mispriced by the market.
  2. Future Earnings: How does AMA Group's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of AMA 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.