What Are Analysts Expecting From carsales.com Ltd (ASX:CAR) Over The Next Year?
Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
Since carsales.com Ltd (ASX:CAR) released its earnings in December 2018, it seems that analyst forecasts are fairly pessimistic, as a 16% fall in profits is expected in the upcoming year compared with the past 5-year average growth rate of 11%. Currently with a trailing-twelve-month profit of AU$185m, the consensus growth rate suggests that earnings will drop to AU$156m by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. For those interested in more of an analysis of the company, you can research its fundamentals here.
Check out our latest analysis for carsales.com
What can we expect from carsales.com in the longer term?
The view from 13 analysts over the next three years is one of positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. I've plotted out each year's earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of CAR's earnings growth over these next few years.
By 2022, CAR's earnings should reach AU$221m, from current levels of AU$185m, resulting in an annual growth rate of 17%. However, if we exclude extraordinary items from net income, we see that earnings is projected to fall over time, resulting in an EPS of A$0.66 in the final year of forecast compared to the current A$0.76 EPS today. However, the near term margins may change heading into 2022, from the current levels of 42% to 41%.
Next Steps:
Future outlook is only one aspect when you're building an investment case for a stock. For carsales.com, I've put together three fundamental 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 carsales.com 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 carsales.com is currently mispriced by the market.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of carsales.com? 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.
