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Looking at The Madison Square Garden Company's (NYSE:MSG) earnings update in March 2019, analysts seem fairly confident, with profits predicted to increase by 28% next year, though this is noticeably lower than the past 5-year average earnings growth of 56%. With trailing-twelve-month net income at current levels of US$142m, we should see this rise to US$181m in 2020. Below is a brief commentary around Madison Square Garden's earnings outlook going forward, which may give you a sense of market sentiment for the company. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
Exciting times ahead?
The longer term view from the 7 analysts covering MSG 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. 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 MSG's earnings growth over these next few years.
From the current net income level of US$142m and the final forecast of US$353m by 2022, the annual rate of growth for MSG’s earnings is 30%. However, if we exclude extraordinary items from net income, we see that earnings is projected to fall over time, resulting in an EPS of $4.12 in the final year of forecast compared to the current $5.99 EPS today. In 2022, MSG's profit margin will have expanded from 9.1% to 20%.
Future outlook is only one aspect when you're building an investment case for a stock. For Madison Square Garden, there are three important aspects 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 Madison Square Garden 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 Madison Square Garden is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Madison Square Garden? 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.