Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
In December 2018, Midway Limited (ASX:MWY) released its earnings update. Generally, analyst consensus outlook seem bearish, with profits predicted to drop by 6.8% next year compared with the past 5-year average growth rate of 15%. With trailing-twelve-month net income at current levels of AU$18m, the consensus growth rate suggests that earnings will decline to AU$17m by 2020. Below is a brief commentary on the longer term outlook the market has for Midway. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
Can we expect Midway to keep growing?
The view from 4 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. To understand the overall trajectory of MWY'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.
By 2022, MWY's earnings should reach AU$18m, from current levels of AU$18m, resulting in an annual growth rate of 2.5%. EPS reaches A$0.32 in the final year of forecast compared to the current A$0.25 EPS today. As revenues is expected to outpace earnings, analysts expect margins to contract from the current 7.8% to 6.6% by the end of 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Midway, I've put together three fundamental factors 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 Midway 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 Midway is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Midway? 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 firstname.lastname@example.org. 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.