What Are Analysts Expecting From Gem Diamonds Limited (LON:GEMD) Over The Next Few Years?
Gem Diamonds Limited’s (LON:GEMD) most recent earnings update in December 2018 indicated that the business benefited from a major tailwind, more than doubling its earnings from the prior year. Below, I’ve presented key growth figures on how market analysts view Gem Diamonds’s earnings growth outlook over the next couple of years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
View our latest analysis for Gem Diamonds
Analysts’ outlook for next year seems buoyant, with earnings expanding by a robust 29%. However, the following year seems to show a contrast, with earnings reducing by -7.6%. This volatility continues into the final year of forecast, with earnings arriving at US$24m.
While it is helpful to understand the growth each year relative to today’s level, it may be more beneficial evaluating the rate at which the business is moving on average every year. The pro of this method is that it removes the impact of near term flucuations and accounts for the overarching direction of Gem Diamonds’s earnings trajectory over time, fluctuate up and down. To compute this rate, I’ve inserted 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 -4.1%. This means that, we can presume Gem Diamonds will chip away at a rate of -4.1% every year for the next couple of years.
Next Steps:
For Gem Diamonds, I’ve put together three key aspects 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 GEMD 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 GEMD is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of GEMD? 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 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.
